Excess basis distribution

[Protax20]

How I can put my Sch L in balance when a shareholder made distributions in excess of the basis? What account I can use for adjust my negative balance?

Thanks

[dd4vols · Accepted solution]

I am assuming you are talking about a Sub-S Corp..... When that happens, I just put the excess as a N/R from the shareholder on the tax return.  And make him pay it back in the next tax year.   In other words, only make the PTI amount as much as the capital basis can stand...and reflect the overage as a temporary loan...not part of the PTI distributions.

[Protax20]

Yes, you are right. I am talking about Sub-S.

What do you mean when you say N/R and PTI. The system let met take the distribution up to the balance on the Sch M-2 and the rest classifies it as distributions in excess of Retained Earnings. I am fine with that but I have the Sch L out of balance and I do not know where to put that diference in order to make it on balance.

I appreciate your answer.

Thanks in advance 

[Accountant-Man]

Let's say he could distribute 10k but he did 20k. Change the distributions to 10k, not 20k, and put 10k into S/H note receivable.

Or instead reduce S/H loan payable, if any.

[bmcdaniels31]

I want to take the distribution as a long term capital gain and not plug the balance sheet with a notes receivable.  The shareholder is not going to pay this back ever.  How do I accomplish this and get rid of the error on the balance sheet?

[JRC]

Are you saying there is a negative capital account on the Balance Sheet because there is an excess distribution greater than AAA?

Right Click the Retain Earnings and Plug in the Number.

[sjrcpa]

Distributions reduce retained earnings. Retained earnings can be negative.