I'm a single-member S-Corp with pretty simple annual taxes but in 2022 I had more Distributions than I actually had available in my Stock Basis. TurboTax Business seems to have calculated things correctly... it's not allowing the Distributions to be higher than my Net Income plus Retained earnings from the previous year, and it's accounting for the excess Distributions on the M-2 worksheet.
The concern becomes the new Retained Earnings balance. In Quickbooks it continues to track the RE with a positive balance, but in TTB the amount is $0 (which makes sense given the situation). The issue is that my Balance Sheet is now off by the exact amount of the Retained Earnings that were zeroed out. For the time being I just manually entered the RE with the same positive balance as I have in QB.
Two questions...
Does manually changing the Retained Earnings to keep the positive balance matching QB change anything from a tax perspective (vs letting TT take it to $0)?
If it's recommended to let TT take the RE to $0, what adjustment is used to offset the difference in RE and level the Balance Sheet?
