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How to enter contributions and distributions in TurboTax Business

by TurboTax•4• Updated about 1 hour ago

An investor’s basis in a partnership or S Corporation begins with the contributions of cash, property, or services. The contributions are recorded by the investment as equity and may be reported on Schedule K-1 or on a supplemental report.

Distributions of cash or property decrease an investor’s basis, and are also reported on Schedule K-1.

To enter contributions and distributions in TurboTax Business, first choose the type of business return you are preparing:

TurboTax Business Online

S Corporation Income Tax Return - Form 1120-S

  1. Open your return, locate Business Info in the menu and select Shareholder Information.
  2. Follow the screen prompts and answer the questions as they apply to your business. 
  3. On the screen, Did [YOUR BUSINESS NAME] distribute any money or property to shareholders during the tax year, excluding salaries, loans, and profits from Sch K-1?, select Yes, the business made distributions to shareholders during the tax year.
  4. On the screen Enter the total amount of distributions made during the tax year, enter the TOTAL amount of cash and/or property paid by the company to the shareholders. TurboTax will allocate these amounts to ‌ shareholders according to their ownership percentages.

Contributions to an S -Corporation are not reported on Schedule K-1. Instead, TurboTax prepares a Shareholder Stock and Debt Limitations Worksheet that is provided with each Schedule K-1.

  1. Open your return and, in the menu, select Tax Tools and select Forms.
  2. Search for and select S Corporation Information Worksheet.
  3. Navigate to Part IV – K-1 Information
  4. Locate the question Calculate and print Shareholder's Stock and Debt Basis Limitations Worksheet?, and select Yes.
  5. Locate QuickZoom to Shareholder Stock and Debt Basis Limitations Worksheet and select Quick Zoom.
  6. Select the Schedule K-1 of the shareholder you’d like to edit from the pop-up selections.
  7. Navigate to Part I Shareholder Stock Basis.
  8. On Line 2, edit the contributions made during the year.
  9. Select the back arrow and repeat steps 5-8 to edit the contributions for any remaining shareholders.
  10. When complete, select Close Forms.

For more information on individual items that affect basis, see IRS S corporation stock and debt basis.

Return of Partnership Income - Form 1065

You can activate the Partner's Capital Account Analysis on Schedule K-1 by choosing to include Schedule L on Form 1065.

  1. Open your return and, in the menu, select Tax Tools and select Forms.
  2. Search for and select Form 1065 p1-4.
  3. Locate Schedule B Line 4d and make sure either Yes or No is selected based on your business details.
  4. Locate Completion of Schedules L, M-1, M-2, etc. Smart Worksheet. and select Yes. 
  5. Search for Schedule K-1 and select the form associated with the partner details you’d like to review. 
  6. Locate part L to review the Partner’s Capital Account Analysis details.

For the full list of increases and decreases to a partner’s interest, see IRS Pub 541 Basis of Partner’s Interest. This reference includes the rules for contr

TurboTax Business Desktop

S Corporation Income Tax Return - Form 1120-S

  1. Open your return, locate Business Info in the menu and select Shareholder Information.
  2. Review the individual shareholder entries and select Done Entering Shareholders. 
  3. On the screen Distributions to the Shareholders, select Yes, the corporation made distributions to the shareholders in 20XX.
  4. On the following screen, enter the total amount of cash/property paid by the company to the shareholders.
    • TurboTax will allocate these amounts to shareholders according to their ownership percentages.

Contributions to an S -Corporation are not reported on Schedule K-1. Instead, TurboTax prepares a Shareholder Stock and Debt Limitations Worksheet that is provided with each Schedule K-1.

  1. From the list of shareholders, continue to the screen Shareholder Stock and Debt Basis Limitations.
    • If this screen doesn't appear, navigate to Forms (icon in the TurboTax header), search for and select the S Corporation Information Worksheet, locate Part IV - K1 Information and the question Calculate Shareholder Stock and Debt Basis Limitations Worksheet, and select Yes.
  2. Edit each partner to enter contributions for the year on Part I Line 2 of the sub-form that appears.

For more information on individual items that affect basis, see IRS S corporation stock and debt basis.

Return of Partnership Income - Form 1065

  1. Open the return, navigate to Business Info and select Partner/Member Information.
  2. From the Member Summary screen, edit each partner (or add partners if this is a new return) and follow the prompts to the Member Capital screen.
  3. Enter cash and property contributions and distributions in the appropriate boxes.

You can activate the Partner's Capital Account Analysis on Schedule K-1 by choosing to include Schedule L on Form 1065.

  1. Navigate to Forms (icon in the TurboTax header) and search for and select Form 1065 p1-4.
  2. Locate Schedule B Line 4d.
    • If the box is checked yes, you aren't required to include these schedules.
    • Note: Choosing to skip the Balance Sheet topic in step-by-step will automatically answer yes to Line 4d.
  3. To include this information, navigate to Line 4b, find Completion of Schedules L etc. Smart Worksheet, and select Yes.
  4. Open any Schedule K-1 (Partner) to confirm that part L is now populated.

For the full list of increases and decreases to a partner’s interest, see IRS Pub 541 Basis of Partner’s Interest. This reference includes the rules for contr