Final 1120-S return and retained earning distribution

[rich]

Appreciate advise, Client is closing real estate S-Corp and sold last property, client haven't took income distribution in past years and shows $219000 retained earning as past and current year balance on schedule M2 Line 8.  Is it right to take cash distribution on Schedule K Line 16D and that info roll overs to schedule M2 line8 to make zero balance? Its Final return though.

[DANRVAN]

On 2/29/2024 at 10:04 AM, rich said:

Is it right to take cash distribution on Schedule K Line 16D and that info roll overs to schedule M2 line8 to make zero balance? Its Final return though.

 I'm not completely clear as to what you are asking.

 If the distribution was taken in 2024 then I would not show it on the 2023 tax return,  since  there would be both a cash balance and retained earnings balance as of December 31 2023.

[DANRVAN]

On 2/29/2024 at 10:04 AM, rich said:

Client is closing real estate S-Corp and sold last property, client haven't took income distribution

Sounds to me like there will be a liquidating distribution, which needs to be treated as payment in full for the exchange of shareholders stock.

[rich]

Client's past accountant haven't took distribution of Income/ profit in past year and funds shows in 219K in AAA account. Previous accountant didn't completed sch L as he says Corp gross under $250K. Now this year Corp is closing for good and should it be right to take all current past tax paid profit and current year profit in distribution on schedule line 16D and that info reflects on schedule M2 line 8 to bring balance to zero.

 

[DANRVAN]

44 minutes ago, rich said:

Client's past accountant haven't took distribution of Income/ profit in past year and funds shows in 219K in AAA account.

I think I follow you now.

Show correct beginning balance and actual distributions for the year.

[rich]

Thank you Danrvan!