qbteachmt
Level 15

"as opposed to making a distribution, Retained earnings don't go negative."

There are "ordering rules" and my understanding is that distributions are first considered to be from Current Earnings, then Retained Earnings, and so on down to paid in capital; then as that goes negative, it becomes taxable income.

As I stated, I'm not a CPA. I recommend you keep up this conversation so that others can chime in.

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