sometimes a C-corporation converts to an S-Corp when it has accumulated earnings and profits (AE&P) - earnings that have not been distributed to the owners. this amount would appear in the M-2 column C. the S-Corp can make an election to distribute the amount representing the (AE&P) before undistributed S-Corp earnings these are dividend distributions that Turbotax may be referring to and would require the filing of Form 1099-DIV. Distributions of S-Corp earnings are non-dividend distributions.
to answer your question
In turbo tax for S Corp under the business section it asks if you have taken any money or property out of the corporation during the tax year other than salaries or loans? here for distribution of S-corp earnings
then under The Federal Taxes Section it Turbo tax asks you to enter the total dividend distributions made to shareholders during the tax year 2022 from your accumulated earnings. not here this is the C-Corp to S-Corp scenarios
Are these the same thing. It won't let me do both so I'm unclear where to put the money taken from profits.
the normal ordering rules for distributions made by the corporation to its shareholders:
1. Reduce the AAA determined without regard to any net
negative adjustment for the tax year (but not below zero). If
distributions during the tax year exceed the AAA at the close of
the tax year, determined without regard to any net negative
adjustment for the tax year, the AAA is allocated pro rata to each
distribution made during the tax year. See section 1368.
2. Reduce shareholders' PTEP account for any section
1375(d) (as in effect before 1983) distributions. A distribution
from the PTEP account is tax free to the extent of a
shareholder's basis in the shareholder's stock in the corporation.
3. Reduce AE&P. Generally, the S corporation has AE&P
only if it hasn't distributed E&P accumulated in prior years when
the S corporation was a C corporation (section 1361(a)(2)). See
section 312 for information on E&P. The only adjustments that can be made to the AE&P of an S corporation are:
a. Reductions for dividend distributions;
b. Adjustments for redemptions, liquidations, reorganizations, etc.; and
c. Reductions for investment credit recapture tax for which the corporation is liable.
See section 1371(c) and (d)(3).
4. Reduce the other adjustments account (OAA).
5. Reduce any remaining shareholders' equity accounts.
