On an S-Corp return, I reduced the wages deduction by the amount of the ERTC credit received.   Since these wages are now non-deductible expenses, should the amount of wage reduction be a decrease to shareholder basis?    Should this amount be a reduction to the AAA account?  

Lacerte is automatically carrying the amount of the non-deductible wages to the AAA as an other reduction and to the shareholder basis worksheet as a reduction in basis.   I have seen some people saying that this is not correct.

Any help is appreciated and if you have a reference to an IRS Notice that addresses this, that would be helpful.

Thank you!