The transferred inventory should be recorded as a capital contribution that increases your basis in the S-Corp. The total contributions (cash and inventory) will not be reported on Schedule K-1 unless you recorded the cash transfer as a stock purchase (in which case, you would have shares under Section H). Distributions are shown on Line 16 Code D.
Use the Step-by-Step interview as much as possible and let TurboTax handle entering information on the forms. This avoids both confusion and errors.
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