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S-Corporation Distribution

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Posted · Report post

My question is: "If you as owner/shareholder of an S-Corp pay yourself a distribution (cash), do you put that amount on Schedule K-1 (Form 1120S)?

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Posted · Report post

Does anyone know this answer?

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Posted · Report post

My question is: "If you as owner/shareholder of an S-Corp pay yourself a distribution (cash), do you put that amount on Schedule K-1 (Form 1120S)?

Line 16 with a code of "D"

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Posted · Report post

Yes, you do.

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Posted · Report post

My question is: "If you as owner/shareholder of an S-Corp pay yourself a distribution (cash), do you put that amount on Schedule K-1 (Form 1120S)?

As said above the payment goes on line 16d to indicate that it was a tax-free distribution of profits that you have or will already pay income tax personally. Its shown on the 1120S-K1 as a code 16d to tell the shareholder that it reduces his tax basis in his stock. The payment is not deductible by the S-corp under any circumstances.

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Posted · Report post

Thanks for responding!!!

Another question: If the S-Corporation makes a distribution of cash to the owner/shareholder do you include that distribution on line 16d of the 1120S return?

In looking at the 2007 Kleinrock's 1120S sample return they have a distribution on Schedule M-2, line 7 (distribution other than dividend distribution) but not an amount in the section "items affecting shareholder basis (16d).

If you have an amount on schedule k-1 (16d) does this same amount go on the 1120S in the two places mentioned in the paragraph above? Why doesn't the sample 2007 Kleinrock return have the distribution in both places?

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Posted · Report post

>>as owner/shareholder of an S-Corp pay yourself a distribution<<

"Distribution" can mean different things, so I'm not quite sure what you are asking. An S-corp doesn't typically pay dividends, but if it did they would be reported on a 1099-DIV, not the K-1. Certain distributions that affect shareholder basis go in box 16. Wages paid to a corporate officer would of course go on a W-2 and as a deduction on K-1.

But owner's draw, as such, has no tax effect and isn't reported. Tax on the flow-through income is the same whether the owner takes the money or not.

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Posted · Report post

Thanks for responding!!!

Another question: If the S-Corporation makes a distribution of cash to the owner/shareholder do you include that distribution on line 16d of the 1120S return?

If the S-corp has always been an S-corp, ALL S-corp "distributions" (cash or other property) are reported on the 1120S, Page 3, Sch-K, line 16d and the shareholders K-1 as Box 16d to reduce individual shareholder tax basis. Line 16d does not reduce profit reported on Page 2, Sch-K, line 1. One exception would be liquidating distributions that might be reported on 1099-DIV. S-corp distributions are sometime incorrectly call draws.

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