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Do I reduce additional paid in capital on Sch L for distributions?

Level 4

Distribution in excess of Retained Earnings (=AAA) for sole  S shareholder, but not in excess of basis due to paid in capital. Do I reduce additional paid in capital on sch L? This was a LLC  which elected 2 years ago to be a S corp. No formal stock shares were issued. Would the debit be to Paid in Capital? 

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No. Retained Earnings will just have a debit balance.

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4 Replies 4

No. Retained Earnings will just have a debit balance.

View solution in original post

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Level 4
How do I make a Negative Retained Earnings even more negative due to Distributions?. Proseries seems to disallow a  negative retained earnings caused by distributions. Proseries instructions say to adjust capital stock.
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Lacerte closes everything to Retained Earnings without comment. AAA is the only thing not reduced below zero by distributions.
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Level 1
Proseries will not carryover a negative retained earnings automatically to the balance sheet so you will be out of balance. Above Schedule M-2 in the Forms view you need to check "no" in the second question about using automated Schedule M-2/Retained Earnings Worksheet amounts so that it does not carry over to the balance sheet.  Then you need to manually input the correct negative retained earnings number on the balance sheet.  Or you can adjust additional paid in capital or capital stock but I think technically you are not supposed to decrease those accounts, especially capital stock.
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