Does Drake automatically calculate the gain that results from a distribution in excess of basis from a s-corp K1?
A distribution reported in box 16, code D flows to the Adjusted Basis worksheet, line 5. If a distribution exceeds the basis that the taxpayer has in the s-corporation, the difference will be carried to Form 8949, Part II. Box F is checked and the description shows as "Excess Distribution" with the name and EIN of the s-corp listed:
Review Wks K1S Detail Adj Basis in view mode for details.
Note: Distributions in excess of stock basis are treated as capital gains regardless of whether or not the taxpayer has debt basis.
See the IRS' page S Corporation Stock and Debt Basis for more information about basis and distributions.