Asked for Form 7203 this year but not past years

[thomas1923]

I have been using TurboTax Business and Personal for years.  I have a two person S-Corp with my wife and I. 

When I entered my K1 this year, I was asked to fill out form 7203, and I'm not sure why.  This brings up the following questions below and you can see my K1 as well.

My K1 is as follows:

Box 1: $10,000

Box 4: $195

Box 16 - D $12,000

Box 17 - A $195
Box 17 - V* STMT

1.  What triggers a "non-dividend distribution from an S-Corp"?  I didn't adjust shares or anything.  Even if I remove all the boxes except 1 and 16D I'm still asked for this form.  

2. Weren't these all dividend distributions?

3. If not, I was not asked for this form in 2021 or 2022; do I need to amend those returns to add this?

I tried to read through some other forum posts but all did seem to have adjustments to shares.  

Thanks.

[Mike9241 · Accepted solution]

16D indicates cash or property was distributed to you that was not deducted from the S-Corps profits nor treated as a taxable dividends (the norm). Distributions or losses reported require the filing form 7203, S-corps like C-Corps distribute profits to their owners in the form of dividends. But for tax purposes, they are e treated differently. For a C-Corp owner such distributions are taxable. They are double-taxed. Once when the C-corp earns the profits and pays taxes on them and again when distributed to the shareholder who is taxed on those distributions.  To avoid this double taxation businesses that qualify may elect S-corp status. It pays no Federal Corporate Income Taxes. Rather the taxation occurs at the owner level.  S-Corp "Dividend" distributions are not taxable income as long as the owner has tax basis in the corp after the distribution. Rather they reduce the shareholder's basis. 

[thomas1923]

Thanks for the quick turnaround.  

That makes sense.  

It does seem like I missed the form for 2021 and 2022 then.  Do you think I should do an amended return to include there?  I heard support for this form wasn't ever good in Turbo Tax those years.

Thanks again.

[RobertB4444]

You don't need to amend 2021 or 22 to include a reduction in basis.  That isn't a taxable event.  You just need to keep track of the basis that you have (it should be being reported to you on your K1) for when you sell this investment.

@thomas1923