mh85251
Level 2

I understand that the shareholder has a L/T cap gain, but I'm confused about how to report this on the books and return.  What is the entry on the S Corp books?  How do I reclass a shareholder distribution to an income account? 

Because if I don't adjust the books, the shareholder is still taking a hit to his capital account for the excess dividends he is paying cap gains on.  Is this correct?

 

 

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