Turbotax Business changing my distributions to zero??

[Plarka]

I just noticed that my K-1s from previous years do not have anything written on line 6 where it says 'Distributions.' I took all the money beyond the salary I paid myself (S Corp) and used it to pay off my house, and entered that in Turbotax, but it looks like Turbotax changed it to zero? Also, I noticed that on the form 7203 in Turbotax this year, it says my basis is higher than it should be, considering I took distributions. Should I fix this by putting that amount of money the IRS thinks I have, into my business bank account? I do have the money because although I took it as distributions this year, it is still in my personal savings unused. Or would that be considered some kind of action made to my business this year, a contribution of money or something like that? Or does it not matter, and I can let the IRS think I have a higher basis than I have? It's just a small tutoring business consisting of just myself. I do notice that each time I go back into Turbotax to work on my return, it changes 'Did you give distributions to shareholders' to 'No' and the amount to 'zero.'

[ThomasM125]

You don't have to put money into your bank account to account for your basis. 

The Form 7203 is used to track your basis in the S corporation which can be important when you take distributions or deduct losses from the company. You can only deduct a loss from ordinary income to the extent you have not exceeded your basis in the company and distributions will reduce your basis. If your stock basis is wrong on the Form 7203, you should correct it by making an adjusting entry in box 12 or 13 on the Form 7203 to adjust the basis to the correct balance at year end.

[Plarka]

Would it flag anything to the IRS like a possible audit if I adjusted it to about $30,000 less than they have it as?

[PatriciaV]

As long as you have good reason for adjusting your basis on Form 7203, you can respond to any inquiries from the IRS. Your basis determines the amount of distributions you can receive as return of capital (nontaxable). Be aware of that if you take money out of the business.