This is really a question for  a tax accountant, and I think you would be better served getting an informed opinion rather than relying on those from the net.

I understand the tax side of it (it goes in block 12 of the K-1), just wasn't sure how I should enter in Quickbooks.

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@jdubndb18 wrote:

I understand the tax side of it (it goes in block 12 of the K-1), just wasn't sure how I should enter in Quickbooks.

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There is more to the tax side than what block it reports in.

The IRS watches for a salary, and then distributions, if they see it the other way around that can start them asking questions.  The question concerning taking a distribution without a salary is a tax question, the general answer is no do not do that at all.  What I do not know is if there is some precedent in tax rules concerning a company not able to support payroll but still allowing a small distribution.

Somehow I managed to reply yesterday to a question I asked a few months ago. The question in this string is already resolved. Yikes, too many things going on!