1120-S - Shareholder Distributions

Shareholder distributions keyed on the DIST screen flow automatically to Schedule K, Line 16d and Schedules K-1 for the shareholders based on each shareholders pro-rata share of the S corporation.

• Overrides are available on the K1E screens.

• The distributions are also carried to Schedule M-2, line 7 (the amount may be limited on Schedule M-2).

• If the last K-1 shows an unexpected amount, see Drake Tax - 1041/1065/1120-S: Last K-1 Entered Shows Incorrect Distribution.

The Schedules K-1 may display an amount different than expected if you have entered conflicting information on the K1E and DIST screens: 

• If you allocated more or less than the total amount distributed to each shareholder using the overrides on line 16, the program will adjust the distribution for the rounding shareholder to reconcile the amount from all shareholders with the amount on Schedule K.

  • For example, the total distribution was $100,000. You entered $15,000 for the first shareholder and $95,000 for the second shareholder on line 16, code D. The program will allocate only the remaining portion of $85,000 to the second shareholder, not the $95,000 you entered as an override.

• Entered overrides on line 16 on some of the K1E screens, but not all of them.

• EF Message 0427 produces if overrides are entered on screens K1E, Overrides tab, line 16, code D without any entries on the DIST screen.

Shares at Start of Year

Each K-1 must have Shares at start of year entered on the K1E screen. The software will then allocate the distributions according to the shares held. If you have not entered shareholder shares at the start of the year, amounts may not display as expected and a notes page is generated.

For example: If Shareholder A holds 15 shares and Shareholder B holds 125 shares, A will be allocated 10.71429% (15 shares held / 140 total shares) of each item listed on the K1. If $100,000 is distributed, A’s share of the distribution would be $10,714. The breakdown can be reviewed on worksheet Wks SOWN in view mode. The overrides for line 16, code D, would be used in the case where the distributions were made differently from the number of shares that each actually held. For example, Shareholder A may have received $20,000 rather than the $10,714 allocated according to the shares held.