K-1 Distribution Correction Only, Amend?

[G2R]

I found a mistake on the K-1s for a corporate return I filed. The distribution amount listed in box 16, code D is wrong for each shareholder is incorrect. The sum of the two numbers is correct and matches page 3's amount on the 1120S, but the actual amount of each shareholder's individual distribution is incorrect. Would you amend only to correct the amounts in Part III, Box 16D amount? Or just give the shareholder's the corrected K-1 amounts so they can file their personal returns with accurate information? 

[jklcpa]

Amend; it affects each partner's basis. State that correction is to allocation of distribs only and total distributions are unchanged.

You don't want rhis to be a case of inconsistent treatment by partners vs partnership.

[Abby Normal]

Just wanted to point out that S corp distributions need to be proportional to the shareholders' ownership percentages. That's why ATX allocated the distributions the way it did. When this happens with one of my clients, I have them make a corrective distribution as soon as possible.

[G2R]

On 5/25/2024 at 1:24 PM, Abby Normal said:

Just wanted to point out that S corp distributions need to be proportional to the shareholders' ownership percentages. That's why ATX allocated the distributions the way it did. When this happens with one of my clients, I have them make a corrective distribution as soon as possible.

Thanks @Abby Normal.  Year after year, I have reminded them of this, and the potential fallout should they not follow these rules. 

You can lead a horse to water .....

[jklcpa]

Why does this continue to happen? Is there comingling of personal and business expenses for one or both of them being paid from the s corp?

If so, advise that stop immediately. If it is really just unequal cash distributions, suggest a bookkeeping analysis shortly before year-end and settle up between the two before the year closes. 

Is the owner receiving the lesser amount aware to the extent he or she is being shorted? It may not be intentional to the size of the amount, but sometimes seemingly smallish differences do add up over time.

[G2R]

4 hours ago, jklcpa said:

Is the owner receiving the lesser amount aware to the extent he or she is being shorted? It may not be intentional to the size of the amount, but sometimes seemingly smallish differences do add up over time.

They are trying to catchup from a year that was far too lopsided.  I have explained the need to even it out, but cash flow has prevented them from retifying the issue all in one shot.  Dad is the one being shortchanged by the son.  He's knows he's losing value each day they don't even it out.