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S-Corp Distribution in excess of basis Schedule L

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    S-Corp Distribution in excess of basis Schedule L

    Everything is fine on my tax return (ProSeries) but my balance sheet is off by the excess distributions. I have to override retained earnings to make it balance, is that correct? It won't affect the basis since shareholder will be taxes on 1040.

    #2
    I am still hoping......maybe BHoffman will read....

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      #3
      Retained earnings is retained earnings. It is not basis, AAA, or any other account. On a balance sheet, it is the net of assets - liabilities - common stock & add'l paid-in capital.

      If your client has taken distributions in excess of net income, then your retained earnings will be a negative number.

      Adjust your retained earnings to the amount it should be on your balance sheet. Your software company is attempting to merge tax & accounting law.

      Maribeth

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        #4
        Yes

        Originally posted by Maribeth View Post
        Retained earnings is retained earnings. It is not basis, AAA, or any other account. On a balance sheet, it is the net of assets - liabilities - common stock & add'l paid-in capital.

        If your client has taken distributions in excess of net income, then your retained earnings will be a negative number.

        Adjust your retained earnings to the amount it should be on your balance sheet. Your software company is attempting to merge tax & accounting law.

        Maribeth
        the software may have a optional feature to prevent distributions from exceeding the AAA. Lacerte does. Why I don't know.

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          #5
          Thank you so much, both of you. It's the only thing that makes sense.

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