If you right click on the Pension, Profit-sharing, etc., Plans Smart Worksheet in TurboTax above line 17 of form 1120-S page one, you will see an option that says About Line 17a. If you click on that link, you will see in the instructions to the worksheet that you are to enter pension plan expenses on line A of the worksheet. Then, the expenses will be reduced by the amount used as a credit and the balance will appear on line 17 as part of your pension plan expense deduction.
Although the credit is limited to $250, the balance of the costs are deductible as pension costs. So, the $250 credit is reflected on schedule K and consequently schedule K-1, and the remaining deduction is reflected on line 17 of form 1120-S, page one.
I read the instructions to line 17 and they do not mention adding the pension costs in with the contributions, but it appears TurboTax has taken the position that that is where they should be entered on the tax return.
So, enter $500 on row A of the worksheet above line 17 and you should be fine.
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