topic TurboTax S-Corp does not substract Shareholder Distribution when the Retained Earning is negative in Business & farm

TurboTax S-Corp does not substract Shareholder Distribution when the Retained Earning is negative

silvertonbook — Sun, 14 Mar 2021 06:16:22 GMT

TurboTax shows how it calculates the Retained Earning:

I have $2000 Shareholder Distribution but TurboTax doesn't deduct it from the Retained Earning. (I tried it with a positive retained earning, it will show the $2000 distribution if it's positive) As a result, this throws off my Balance Sheet calculation by $2000. What should I do? Any suggestion is appreciated!

Re: TurboTax S-Corp does not substract Shareholder Distribution when the Retained Earning is negative

silvertonbook — Sun, 14 Mar 2021 06:37:13 GMT

Just for clarification, I am not withdrawing more than the stock basis. My stock basis is $20k so the $2k distribution is just a return of capital.

Re: TurboTax S-Corp does not substract Shareholder Distribution when the Retained Earning is negative

M-MTax — Sun, 14 Mar 2021 15:49:03 GMT

With negative RE you've either loaned $$ to your corp or you have a cap gain because the distribution is more than your basis.

Re: TurboTax S-Corp does not substract Shareholder Distribution when the Retained Earning is negative

silvertonbook — Sun, 14 Mar 2021 18:23:52 GMT

I am confused. Please help me understand. I made no loan to the S Corp. I initially invested $20k as capital contribution to the S Corp. This year (the first year) has a loss of $12k. Later in the year I took $2k distribution as return of initial capital.

So the regained earning is negative $12k, right?

Re: TurboTax S-Corp does not substract Shareholder Distribution when the Retained Earning is negative

M-MTax — Sun, 14 Mar 2021 22:14:23 GMT

RE is a negative $14k because you have a $12k loss plus a $2k distribution. You invested $20k so your cash needs to go down.....credit decreases assets........by $14k in order to balance,