How do I allocate distributions to only 1 K-1?

Forum|Forum|1 year ago
September 12, 2024
2 replies
18 views

Hello,

This is on the S-corp tax return, which only has 2 K-1. The cash distribution was only to one owner, how do I show 100% of distribution on his K-1? I don't see an allocation page on this.

Thanks!

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IRonMaN

Level 15

Distributions are supposed to be according to ownership percentages. Doing otherwise kills your sub S election.

Slava Ukraini!

N

NoelCAuthor

Level 2

Got it! Thanks!

IRonMaN

Level 15

You betcha!

Slava Ukraini!

PhoebeRoberts

Intuit Community Champion

The Distributions screen requires you to make entries by shareholder, unlike in the 1065 package.

There's been a recent court ruling that says disproportionate distributions, when not allowed by the operating agreement, doesn't bust your S-election. It's been in the last 3 weeks, and the fact pattern was that the guy who didn't get cash didn't want to pick up his share of the income, and argued that the S-election had been busted and you don't get pass-through income from a C-corp. Tax Court disagreed!

qbteachmt

Level 15

Thanks, @PhoebeRoberts . Is there guidance for how to handle that difference, eg Owed to Shareholder that didn't get a distribution or Owed By Shareholder for the difference distributed?

Don't yell at us; we're volunteers

PhoebeRoberts

Intuit Community Champion

Either of those works. I think "Due to Guy Who Didn't Get Paid" is maybe technically more correct, but it probably depends on state law.

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