How to enter contributions and distributions in TurboTax Business
An owner's basis in a partnership or S corporation begins with the contributions of cash, property, or services. The contributions are recorded as equity and may be reported on the Schedule L Balance Sheet (S corporations), the Schedule M-2 and Schedule K-1 (partnerships), or on a supplemental report.
Distributions of cash or property decrease an owner’s basis, and are also reported on Schedule K-1.
Entering contributions or distributions in TurboTax Business differs significantly between partnerships and S corporations. This article will walk you through how to enter contributions and distributions in S corporations and partnerships in both TurboTax Business Online and TurboTax Business Desktop.
TurboTax Business Online
S corporation income tax return: Form 1120-S
Distributions to an S corporation shareholder are reported on Schedule K-1 and Schedule M-2. Follow these steps to enter distributions in TurboTax Business:
Open your return, locate Business Info in the menu and select Shareholder Information.
Follow the screen prompts and answer the questions as they apply to your business.
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.
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 aren't reported on Schedule K-1. Instead, contributions get reported on the S corporation’s Schedule L Balance Sheet and a Shareholder Stock and Debt Limitations worksheet that TurboTax provides with each Schedule K-1.
To enter contributions on the balance sheet:
Go to Federal, then select Balance Sheet.
On the Your Reconciliations and Balance Sheet screen, select Edit next to Balance Sheet.
Use either Quick Entry or Guide me to begin entering balance sheet information.
Enter the company Assets and make sure the total assets match what's reported on the company books, then select Continue.
Enter total contributions as Capital Stock or Additional Paid in Capital (whichever is applicable) within the Capital and Retained Earnings section.
To enter contributions on the Shareholder Stock and Debt Limitations worksheet:
Select Tax Tools, then select Forms.
Search for and select S Corporation Information Worksheet.
Navigate to Part IV – K-1 Information
Locate the question Calculate and print Shareholder's Stock and Debt Basis Limitations Worksheet?, and select Yes.
Locate QuickZoom to Shareholder Stock and Debt Basis Limitations Worksheet and select Quick Zoom.
Select the Schedule K-1 of the shareholder you’d like to edit from the pop-up selections.
Navigate to Part I Shareholder Stock Basis.
On Line 2, edit the contributions made during the year.
Select the back arrow and repeat steps 5-8 to edit the contributions for any remaining shareholders.
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
Partnership contributions and distributions are reported as part of the partners’ capital accounts. The amount reported on the Schedule L Balance sheet should match the amount reported on Line 9 of Schedule M-2.
To enter contributions and distributions made by a partner:
Go to Federal, then select Balance Sheet.
If you aren't required to file a balance sheet, select No, I want to complete my balance sheet including income and partner capital reconciliations. Continue until you reach the Let’s enter your capital account information screen.
If you're required to file a balance sheet, selecting Federal, then Balance Sheet will take you right to the Let’s enter your capital account information screen.
Enter the contributions and distributions for each partner accordingly.
To review the Partner's Capital Account Analysis on Schedule K-1:
Select Tax Tools, then Forms.
Search for Schedule K-1 and select the form associated with the partner details you’d like to review.
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.
TurboTax Business Desktop
S corporation income tax return: Form 1120-S
Go to Business Info, then select Shareholder Information.
Review the individual shareholder entries and select Done Entering Shareholders.
On the screen Distributions to the Shareholders, select Yes, the corporation made distributions to the shareholders in 20XX, then continue.
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, and will also report this amount on Schedule M-2, if applicable.
Contributions to an S corporation aren't reported on Schedule K-1. Instead, they get reported on the S corporation's Schedule L Balance Sheet and a Shareholder Stock and Debt Limitations worksheet that TurboTax provides with each Schedule K-1.
To enter contributions on the balance Sheet:
Go to Federal Taxes, then select Balance Sheet.
On the Your Reconciliations and Balance Sheet screen, select Edit next to Balance Sheet.
Use either Quick Entry or Guide me to begin entering balance sheet information.
Enter the company Assets and make sure the total assets match what's reported on the company books. Then select Continue.
Enter total contributions as Additional Paid in Capital within the Capital and Retained Earnings section.
To enter contributions on the Shareholder Stock and Debt Limitations worksheet:
Switch to Forms mode.
From the list of shareholders, continue to the screen Shareholder Stock and Debt Basis Limitations.
If this screen doesn't appear:
Select 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.
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
Open the return, navigate to Business Info and select Partner/Member Information.
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.
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.
Select Forms (icon in the TurboTax header).
Search for and select Form 1065 p1-4.
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.
To include this information, navigate to Line 4b, find Completion of Schedules L etc. Smart Worksheet, and select Yes.
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.
