1120-US: Making the election for a deemed dividend (FAQ)

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Question

How can I make the election for a deemed dividend?

Answer

UltraTax CS automatically prints the election to distribute a deemed dividend when an amount is entered in the Deemed dividend elected under Regulation 1.1368-1(f)(3) field in Screen Ms in the Balance Sheet folder. This election is not a traditional election statement in that it is not viewable or editable, and is not selected in Screen Elect.

UltraTax CS treats the amount entered in the Deemed dividend elected under Regulation 1.1368-1(f)(3) field as a dividend distribution paid from accumulated E&P and reduces the Retained Earnings Unappropriated (REU) account. The Additional Paid-in Capital account at the end of the year is increased by the same amount, as well as the shareholder's stock basis in the S Corporation.

Related topic: 1120-US: S Corporation distributions and section 1368 distribution elections FAQs

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