topic Getting professional help in Business & farm

Net income vs retained earnings after distribution

PTGeek — Mon, 23 Feb 2026 11:58:17 GMT

I am an s corp. Took a small distribution in 2022. When I started doing taxes, Turbotax is considering my distribution and lowering my net income. I thought the distribution came out of my "basis" and has no impact on the end of year net income. As a result, I am getting an error on my balance sheet.

Re: Net income vs retained earnings after distribution

Anonymous_ — Tue, 21 Feb 2023 15:44:19 GMT

For QB questions or issues, you might want to try the QB Community.

https://quickbooks.intuit.com/learn-support/us-quickbooks-community/misc/03/community-us

Re: Net income vs retained earnings after distribution

PTGeek — Tue, 21 Feb 2023 15:46:17 GMT

sorry, I meant TT.. I fixed original post.

Re: Net income vs retained earnings after distribution

Anonymous_ — Tue, 21 Feb 2023 16:02:03 GMT

Where are you seeing this "lowering" of your net income?

The S corporation's ordinary business income/loss should appear on Line 21 of your 1120-S and distributions of cash/property to shareholders should not have any impact on that figure.

Your distributions of cash/property should appear on your K-1 and will generally lower your basis.

Re: Net income vs retained earnings after distribution

PTGeek — Tue, 21 Feb 2023 16:17:40 GMT

schedule M-2

retained earnings smart worksheet

Re: Net income vs retained earnings after distribution

Anonymous_ — Tue, 21 Feb 2023 16:21:45 GMT

That is your AAA.

See https://www.irs.gov/instructions/i1120s#en_US_2021_publink11515kd0e6961

Re: Net income vs retained earnings after distribution

Mike9241 — Tue, 21 Feb 2023 17:25:46 GMT

the on;y way this could happen in QB if the wrong tax code was use for the distribution making it an expense and not a distribution. you are correct a distribution should not reduce S-Corp income. only your basis.

Re: Net income vs retained earnings after distribution vs basis vs QBI

PTGeek — Mon, 27 Feb 2023 12:48:08 GMT

OK. The more I learn, the more confused I am.

Distribution comes out of my basis and doe not impact my net income or my retained earnings = got it

income remaining at the end of the year = net income ... got it

then TT talks about retained earnings. Are retained earnings the same as net income?

Do retained earnings ultimately get added to my basis (for potential distribution this year)

I understand I am paying taxes (through my personal tax return) on my net income or QBI but I am a little lost on the retained earnings vs basis.

None of the IRS documents explain this in a way I can understand.

HELP

Re: Net income vs retained earnings after distribution vs basis vs QBI

Anonymous_ — Mon, 27 Feb 2023 14:31:22 GMT

@PTGeek wrote:
Distribution comes out of my basis and does not impact my net income or my retained earnings = got it

In short, net income will increase retained earnings while distributions will decrease retained earnings.

Re: Net income vs retained earnings after distribution vs basis vs QBI

PTGeek — Mon, 27 Feb 2023 16:36:47 GMT

how to retained earnings impact basis? do they "add" to my basis/increase my basis or are these two separate columns?

Re: Net income vs retained earnings after distribution vs basis vs QBI

Anonymous_ — Mon, 27 Feb 2023 16:47:00 GMT

Net income (that you are taxed on) increases your basis while distributions decrease your basis.

Retained earnings basically tracks the undistributed balance of income of the corporation.

Getting professional help

PTGeek — Wed, 01 Mar 2023 14:34:56 GMT

I have gotten myself so frustrated with this year's taxes. I think I need to bite the bullet and get professional help. Has anyone used TT to do the business s-corp taxes for them? good experience? I know I am in "crunch time"

Re: Getting professional help

Anonymous_ — Wed, 01 Mar 2023 14:43:27 GMT

Have you seen the pricing structure?

https://turbotax.intuit.com/personal-taxes/online/live/full-service/business-taxes

Re: Getting professional help

PTGeek — Wed, 01 Mar 2023 14:45:52 GMT

yes. I don't feel like the pricing is too bad? do you? I'd love to use a small CPA firm but I am worried i am cutting it too close to 3/15

Re: Getting professional help

Anonymous_ — Wed, 01 Mar 2023 14:47:10 GMT

No, I do not, but I simply wondered if you were aware of it. I do not believe it is out of line in the least.