S-corp shareholder distributions with a negative Retained Earnings

Forum|Forum|5 years ago
April 3, 2021
2 replies
5 views

Took a loan out for $100k for an equipment purchase and I took the section 179 deduction for $80,000. My net income after the section 179 was $20,000. My beginning retained earnings was $10,000, and I had a distribution of $40,000. The program is only letting me take a distribution of $30,000 - I believe because it thinks its a dividend, but its a shareholder distribution. I am trying to manually adjust the numbers but can't. I believe the program needs to be adjusted to allow Scorp shareholder distributions to be greater than the retained earnings. Please help

TurboTax Business Windows

Anonymous_

Level 15

@JimE62 wrote:

....I believe the program needs to be adjusted to allow Scorp shareholder distributions to be greater than the retained earnings.

The program will allow that and will actually adjust the retained earnings and allow them to go negative on the balance sheet.

You can provide more information here, but you might want to contact phone support via the link below.

What is the TurboTax phone number? (intuit.com)

Rick19744

Level 13

Based on the limited facts, I believe you may be referring to the AAA when you indicate that the program is not letting you go negative.

If that is in fact the case, the program is correct. AAA cannot go negative through distributions.

Beginning $10,000 + net income of $20,000 = $30,000. Since that is the balance in AAA, you will only be allowed to reflect $30,000 in this account.

Keep in mind that the K-1 will still reflect the $40,000 in distributions.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

JimE62Author

Level 2

This is an S-Corp, so it should be able to show a negative retained earnings. The distribution is not a dividend.

JimE62Author

Level 2

I did call the support desk and they couldn't help me. I showed them where I entered the distribution amount, and where the program would only take the amount up to the positive retained earnings. because this is an s-corp, this is a distribution and not dividends, so you can have a negative retained earnings. I may have to print the return and fix it manually with white out. Very frustrating....