1120-US: Calculating the gain recognized on excess non-dividend distributions (FAQ)

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Question

How does UltraTax CS calculate the gain recognized on excess non-dividend distributions?

Answer

UltraTax CS calculates the gain on excess non-dividend distributions by taking the difference between the shareholder's stock basis before any current year reductions for total losses and deductions, and the current-year non-dividend distribution for the shareholder. If the non-dividend distribution exceeds the stock basis, a gain is calculated on the Shareholder's Basis Worksheet, Page 1, and transfers to the Schedule K-1 statements, Box 17, Code V. Non-dividend distributions do not reduce the shareholder's loan basis.

If you want to change the amount of gain that is shown in the K-1 statements, enter an amount in the Gain on excess distributions (Force) field in the Stock tab in View > Shareholder Information > Other Info tab > Shareholder Basis dialog. If you do not want any gain to show in the K-1 statements, enter 0 (zero) in this field. The Shareholder’s Basis Worksheet does not reflect amounts entered in the Gain on excess distributions (Force) field.

Related topic: 1120-US: Shareholder basis calculations FAQs

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