Skip to main content
Level 3
May 21, 2020
Question

Question: Owner Contributions/Distributions (1120)

  • May 21, 2020
  • 11 replies
  • 30 views

Hello,

This is my first time preparing a balance sheet on Proseries for an 1120 corporation and I could use some help with how to allocate owner distributions and contributions. 

This is a new business and the corporation has a Net Loss of $7,044. the owner contributed $63,630.24 of their personal funds and took a distribution of $40,085.66. I have managed to get the Balance Sheet to balance.

My issue however is that I am not sure I am including the contribution and distribution in the correct boxes. I place the distribution under line 5a of Schedule M-2 and for the contribution I placed it under line 3 of Schedule M-2 which is "other increases" and typed in the line item "Owners Contribution". I find it odd there isn't a specific line item for owner contributions. Is this correct?

Lastly, there is the question on Line 6 of the Schedule K which states as follows:

"During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in excess of the corporation's current accumulated earnings and profits? See section 301 and 316 - if Yes, file form 5452, Corporate Report of Nondividend Distributions"

However, I see no 5452 form within Proseries and I am not sure if this even applies in my case even though there is a loss.

Any help or guidance on this matter would be greatly appreciated. Thank you!

This topic has been closed for replies.

11 replies

Level 8
May 21, 2020

That's a big task to take on if you're not sure about what to do and where.

CPA Academy offer free webinars on all tax subjects and you might want to look in their archived section for some guidance. I only prepare 1040's so I can only offer guidance on where you might find the answers.

Accountant-Man
Level 13
May 21, 2020

If it's a C corp, 1120, then there are no "Owner distributions," only salary, dividends, or repayments of Loans to Company.

The Contributions are either Capital Stock, Additional Paid in Capital, or Loans to Company.

So what are your numbers, really? Contributions = $___?

Distributions = $___ ?

** I'm still a champion... of the world! Even without The Lounge.
qbteachmt
Level 15
May 21, 2020

C Corps have shareholders. They really don't have Owners, because they are their own entity. How many Shareholders are there?

Don't yell at us; we're volunteers
ytriay87Author
Level 3
May 21, 2020

The corp only has that one shareholder. So is this "distribution" actually considered a dividend?

qbteachmt
Level 15
May 23, 2020

It's time to find someone to mentor you on 1120, to take some continuing ed classes, and to otherwise get up to speed on this entity type and the tax regulations and how they apply. You cannot ask the internet to teach you this tax type in a peer user forum for how to use ProSeries. This is not the place for How to Learn to do taxes. Peer users cannot be responding to you one-and-one as a training cycle. This is not Intuit Tech Support or Customer Support.

Don't yell at us; we're volunteers