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Form 1120: Entering Dividends Paid by Corp to Shareholder

I saw a similar question posted months ago but could not follow the solution that was provided.

On Form 1120, where can I indicate the dividends paid by the corporation to the sole shareholder? My balance sheet is out of balance and the difference is dividends paid.

Thank you.

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1 Solution

Accepted Solutions
sjrcpa
Level 15

Dividends reduce retained earnings.


Ex-AllStar

View solution in original post

10 Comments 10
sjrcpa
Level 15

Dividends reduce retained earnings.


Ex-AllStar

Thank you. I entered them on Schedule M-2 under Distributions.

vandm2019
Level 1

Dividends distributed to an officer of an 1120 goes in Schedule M-2, what if is not required to file a balance sheet.

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sjrcpa
Level 15

They still reduce retained earnings.


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LARRYLIFE
Level 2

Do we need to create a 1099-DIV for the shareholder?

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sjrcpa
Level 15

Someone does. It's late, too.


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Jaimeandjaime
Level 2
Spoiler
For a 1120 Dividend Distribution

If you issue a 1099-Div is it taxable to the shareholder the dividend distribution ?  The taxes due in the 1120 were already paid.  
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abctax55
Level 15

@Jaimeandjaime 

Yes, of course.   Dividends PAID are taxable to the recipient; not deductible by the entity.   That's an excellent example of the 'double taxation' component of C-Corps

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Jaimeandjaime
Level 2

Thank you !

abctax55
Level 15

@Jaimeandjaime 

YVW

"Tax software is no substitute for a professional tax preparer"