Scorp 1120S Retained Earnings & Shareholder Basis

[CurtisStevens]

My business is taxed as an s-corp effective 1/1/21, a sole prop prior to that. To start off clean, I created a new QB file starting 1/1/21 as the s-corp business. The money I had in the checking account at that time became capital stock/investment. Let's use hypothetical numbers. I invested $100, made $200 for 2021, and withdrew $250. Turbotax doesn't ask in the guide, I had to go find the stock & loan basis worksheet to enter my $100 beginning stock basis. That's the only place I can find where to enter my starting basis.

My questions, are any of them a big deal?

1. Does it matter M-2 line G is showing $50, distribution in excess of RE?
2. K-1 line 16, items affecting shareholder basis is $250, more than 2021 profit/RE.
3. 1120S Schedule L (balance sheet per Books), should I bother entering anything under the beginning of tax yr, such as my starting cash/capital stock? The guide only enters the end of yr figures.

Thanks for your time.

[M-MTax]

Doesn't seem like any of them is a big deal. 

Your basis is $100 plus $200 income LESS the $250 distribution which leaves you with a basis of $50, so the $250 on the K-1 is right....as is the $50. 

You can enter the $100 as starting cash on the balance sheet and offset that on the liability and SE side.

[Rick19744]

A couple of follow-up comments:

1. You should not have any beginning balance sheet items as this is the initial year of the S corp.
2. If you are uploading QB into TT, make sure that the 1120-S Schedule M-2 line 7 is only $200.  Distributions cannot cause AAA to go negative.
3. Based on comment 2, your K-1 and AAA distributions will not agree.