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.
