qbteachmt
Level 15
05-22-2023
02:10 PM
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Whoever prepared the 1120S did it wrong. And the amount of distribution for a 50% shareholder affects the other shareholder, so that is the second error.
Doing it properly allows the S Corp this as an expense (deduction). The reporting on the W2 makes it income to the shareholder, who then can include it in the SE business for expense.
All of which is what should be happening.
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Don't yell at us; we're volunteers