Announcement

Collapse
No announcement yet.

-ve Distribution

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    -ve Distribution

    My scorp client has in his 12/31/2005 balance sheet distribution of negative -$121,000 in liability section.

    His RE is negative: -$6000
    Net income as of 12/31/2005 is 109,000
    Capital stock is $1000

    What should I do with -ve distribution?

    Thanks

    #2
    What is a "-ve" distribution?

    Is this account in the liability section or the equity section of the balance sheet?

    Cash and property distributions are debit balance accounts in the equity section, is this what you have?

    Or, is this a shareholder loan account with a debit balance in the liability section?

    Comment


      #3
      Originally posted by OldJack
      What is a "-ve" distribution?

      Is this account in the liability section or the equity section of the balance sheet?

      Cash and property distributions are debit balance accounts in the equity section, is this what you have?

      Or, is this a shareholder loan account with a debit balance in the liability section?
      This distribution account is in Equity section. Of the total total distribution, client took $20,000 to purchase land which is in asset section

      Yes it is Debit balance in equity section. But net income is only 109,000
      and RE is negative 6000 (Debit balance)

      No this is not a shareholder loan account with a debit balance in the liability section

      I should add everything to RE and have big -ve RE is that what you suggesting?.

      Thanks

      Taxme

      Comment


        #4
        Originally posted by Taxme
        This distribution account is in Equity section. Of the total total distribution, client took $20,000 to purchase land which is in asset section
        It would appear to me that the $20,000 taken to purchase the land should not be charged as a distribution, rather, as part of the land cost that you say is owned and shown as an asset of the corporation. If this is true it should be reclassified and then you have no problem.
        Last edited by OldJack; 01-16-2006, 04:25 PM.

        Comment


          #5
          Originally posted by OldJack
          It would appear to me that the $20,000 taken to purchase the land should not be charged as a distribution, rather, as part of the land cost that you say is owned and shown as an asset of the corporation. If this is true it should be reclassified and then you have no problem.
          What about rest of the -ve distribution? Should I just add to RE and show as -ve RE?

          Comment


            #6
            Originally posted by Unregistered
            What about rest of the -ve distribution? Should I just add to RE and show as -ve RE?
            If the $20,000 is reclassified as part of the cost of the land you would no longer have a negative RE account as the profit of $109k is also a part of the RE account. Actually we are talking about the AAA account which is a sub-account of the RE account. If I understood you numbers it was something like this (I can not see your numbers while posting this):

            -6,000 Beginning RE
            +109,000 income for the year
            -101,000 distributions for the year (121k less the 20k reclassified)
            + 2,000 positive ending RE balance
            Last edited by OldJack; 01-16-2006, 05:18 PM. Reason: add the word "not" in I can not see

            Comment


              #7
              Originally posted by OldJack
              If the $20,000 is reclassified as part of the cost of the land you would no longer have a negative RE account as the profit of $109k is also a part of the RE account. Actually we are talking about the AAA account which is a sub-account of the RE account. If I understood you numbers it was something like this (I can see your numbers while posting this):

              -6,000 Beginning RE
              +109,000 income for the year
              -101,000 distributions for the year (121k less the 20k reclassified)
              + 2,000 positive ending RE balance
              You are right. Thank you !

              Comment

              Working...
              X