Robin Johnson

If I reduce OAA by the ppp related expenses then there is no OAA availing for the distribution. It should be a capital gain on the shareholder's 1040 but when it imports, I think due to the ordering rules, it allows them the distribution and also allows them a prior year carryover loss to the extent that the distribution was less than the PPP loan. So confused.

Yes. Totally. They took a $33,000 distribution and have no basis. Their tax exempt/ppp loan forgiveness is $71,000. The software is not showing the distribution on line 7 of the M-2 AAA column but when it loads to their 1040 it is allowing the distribution due to the $71,000 ppp income.

So the PPP loan forgiveness is an addition item and with the ordering rules gets to take a distribution against this forgiveness even though the company has a loss overall for the year and no beginning AAA to support the distribution?

Thank you! I did end up putting on line 7 of the M2. I also opened a case. I blew a half a day trying to get the program to do this properly. I also sent the service rep this link to try to explain to her what the issue was: support.cch.com/kb/solution/000119778/119778 ATX needs something like what here. A check box so that the program does this correctly. Thanks to all of you for helping me out. I'm a sole practitioner and I'm very grateful to have people like you supporting this community! Have a great tax season!

It's an operating business

Thank you for your reply. Yes. They are on line 10 of page 1. So net income per books on the M1 is correct but then line 3 of the M1 has the Guaranteed payments listed as an M-1 adjustment. Is that right? That's what's messing up my return.

I am having trouble with the M-2. My net income per books is overstated by the guaranteed payments. Is there somewhere in ATX where I can check a box to deduct the guaranteed payments?