I'll answer by your question numbers:
- No, basis/equity cannot be negative for an S-Corp so the system stops tracking at $0 until you earn income to increase the amount
- Unless you are required to report the forms with your balance sheet, you do not need to do anything. You can manually track (outside TurboTax) the information based on your 2020 return and enter your beginning balance for 2021 (ending balance from 2020) in forms mode.
To get to forms mode and change the amount please follow these steps:
- Within your tax return use the Forms icon in the upper right of the screen to switch to forms mode
- Select Form 1120S p3-5 from the list on the left
- Scroll down to the Schedule M-2 section
- Ensure the Yes checkbox is selected for the Compute Schedule M-2? line
- You can also select Yes for the If Yes, use automated ScheduleM-2/Retained Earnings Worksheet amounts? line
- Scroll down and enter your 2021 Balance at beginning of tax year amount in column (a)
@XrayDoc88
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