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How to resolve Lacerte Diagnostic Ref. 25312 - amount of distributions entered on S-Corp Schedule K, line 16d

SOLVEDby IntuitLacerte Tax56Updated August 19, 2021

Though this diagnostic is critical, it won't prevent the return from being transmitted electronically.


This article will help resolve the following critical diagnostic:

  • The amount of distributions entered on Schedule K, line 16d is greater than the total net balance available for distribution in all of the Schedule M-2 accounts by $XXX. This amount of excess distributions has reduced the ending balance of Retained Earnings on Schedule L, line 24." (ref. #25312) (in prior tax years this reference number was. (ref. #341).

This critical informational diagnostic generates when the distributions on Schedule K, line 16d exceed the balance of Schedule M-2, line 8, and the amounts are being limited (not reducing the amount on Schedule M-2 below 0). Make sure the amounts on the Schedule K and Schedule M-2 are correct. If the amounts are accurate, the diagnostic may be ignored.

To prevent the amounts from being limited to balance:

  1. Go to Screen 32, Schedule M-2.
  2. Locate the Accumulated Adjustment Account (Schedule M-2) section.
  3. Enter a 2 in Distributions from AAA: 1=limited to balance, 2=not limited to balance [O].
    • Entering a 2 will calculate a negative amount on the Schedule M-2, line 8 by placing the entire amount of distributions on line 7, regardless of the amount on line 6.

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