Background: Established business, S-Corp. 2 owners, both taking reasonable salaries, as well as distributions.
In 2017, our net income was $50k, but we (2 owners) took $70k in distributions. (The excess came from cash in the bank, accumulated in previous years.) But in the Balance Sheet section, we have:
- Beginning Retained Earnings: $85k
- Plus: Book Net Income: $50k
- Less: Shareholder distributions: $50k
This results in our Retained Earnings remaining unchanged. But that's incorrect. The retained earnings have decreased, because the distributions are $70k, not $50k. But TurboTax won't reflect the actual distributions.
Would this be something for the 1120S Schedule L line 25, "adjustments to shareholders' equity"? I've been googling for hours but I'm not having any luck figuring out how to account for taking more distributions than net income. (The K-1 forms have the "right" value, but that doesn't help the retained earnings or the balance sheet line up.)
Thanks for any help anybody can offer!
