Form 1120: Entering Dividends Paid by Corp to Shareholder

[mobilestranger21]

I saw a similar question posted months ago but could not follow the solution that was provided.

On Form 1120, where can I indicate the dividends paid by the corporation to the sole shareholder? My balance sheet is out of balance and the difference is dividends paid.

Thank you.

[sjrcpa · Accepted solution]

Dividends reduce retained earnings.

[mobilestranger21]

Thank you. I entered them on Schedule M-2 under Distributions.

[vandm2019]

Dividends distributed to an officer of an 1120 goes in Schedule M-2, what if is not required to file a balance sheet.

[sjrcpa]

They still reduce retained earnings.

[LARRYLIFE]

Do we need to create a 1099-DIV for the shareholder?

[sjrcpa]

Someone does. It's late, too.

[Jaimeandjaime]

Spoiler

For a 1120 Dividend Distribution

If you issue a 1099-Div is it taxable to the shareholder the dividend distribution ?  The taxes due in the 1120 were already paid.  

[abctax55]

@Jaimeandjaime 

Yes, of course.   Dividends PAID are taxable to the recipient; not deductible by the entity.   That's an excellent example of the 'double taxation' component of C-Corps

[Jaimeandjaime]

Thank you !

[abctax55]

@Jaimeandjaime 

YVW