topic Sole owner s-corp distribution on K1 in Business & farm

Sole owner s-corp distribution on K1

Anonymous — Wed, 10 Mar 2021 18:30:06 GMT

Am a sole owner of a s-corp and pay myself a w2 salary. At the end of the year, I took money out beyond the w2 income but left some money in the company to reinvest for cash flow purposes. When entering this into turbotax it asks if I paid myself a distribution and then reports that on the K1 in 16D but is that right and does that count as a "distribution".

Then, on my personal taxes do I need to do anything with that amount as right now it just shows the full income amount and doesn't do anything with the distribution nor does TurboTax ask me anything about it.

Here are the rough numbers I'm working with, as it's a simple return overall:

Starting basis - $1000

Business income (line 1 from K1) - $62000

Distribution (line 16D from K1) - $37000

Re: Sole owner s-corp distribution on K1

Anonymous_ — Wed, 10 Mar 2021 18:47:12 GMT

@Anonymous wrote:

....asks if I paid myself a distribution and then reports that on the K1 in 16D but is that right and does that count as a "distribution".

Yes, that is correct; the distribution is reported on 16D but only reduces your basis and is not taxable (provided you have sufficient basis).

Re: Sole owner s-corp distribution on K1

MinhT1 — Wed, 10 Mar 2021 18:47:19 GMT

Distributions are money that you withdrew from the business over and above your salary (reported on your form W-2.

Distributions are reported on Schedule K-1 Form 1120S in box 16 code D.

Distributions are not taxable on your personal return because the income (profit) of the S-Corp has already been taxed and the distribution is less than your basis in the S-Corp.

On your personal return, you do not report the distributions (other than inputting your box 16 of the Schedule K-1).