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S-Corp Distribution and 1099-DIV

Forum|Forum|6 years ago
June 1, 2019
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I am a single member LLC that for tax purposes is filing as an S-Corp. I paid myself a salary but also took a distribution at year end. I do not see where in TurboTax for Business I would enter this? There is a dividend section under Income but I would think that section is for any dividends paid TO the s-corp. Shouldn’t it be an expense to the s-corp?

Also, Will TurboTax generate the 1099-DIV for this distribution?

TurboTax Business Windows

Best answer by ChristinaS

Distributions aren't generally income to you as the shareholder, and they are not deducted as an expense (just like dividends aren't deductible). Since you are taxed as an SCorp, you pay income tax on the net income of the business whether you take the money out or not. You are not taxed for actually taking the money.

Income distributed to you via Form k1 increases your basis. Distributions decrease that basis. You are personally only taxed when you take money out beyond your basis (investment, net income), which isn't that common.

To indicate that you have received a distribution:

Go to Business Info
Shareholder Information tab
Click Done Entering Shareholders from summary screen
"Yes" the corporation made distributions to shareholders
Put the total amount on the next screen
This will carry to your K1, Box 16D items affecting shareholder basis

C

ChristinaSAnswer

Distributions aren't generally income to you as the shareholder, and they are not deducted as an expense (just like dividends aren't deductible). Since you are taxed as an SCorp, you pay income tax on the net income of the business whether you take the money out or not. You are not taxed for actually taking the money.

Income distributed to you via Form k1 increases your basis. Distributions decrease that basis. You are personally only taxed when you take money out beyond your basis (investment, net income), which isn't that common.

To indicate that you have received a distribution:

Go to Business Info
Shareholder Information tab
Click Done Entering Shareholders from summary screen
"Yes" the corporation made distributions to shareholders
Put the total amount on the next screen
This will carry to your K1, Box 16D items affecting shareholder basis

N

nj_donAuthor

Have a follow-up question that hopefully can be answered! I did enter the distribution amount and generated the k1 but notice that the K1 does not indicate this as a dividend payment so on my personal taxes it is being summed together with my regular income which would be a higher tax rate. How does one correct this so the K1 reflects the ‘dividend’ payment?