On a K-1 from Form 1120S, that is, the K-1 form an S Corp issuing to its shareholder, all items, information, listed in Part III, are income (loss) items the individual, the shareholder, needs to recognize on his/her tax return. Some of the items are for information only and have no tax effect on the shareholders tax return.
These items are not items the corporation owed to him. The only item I can see with the word of "net" is column 2 of net rental income or loss. That means the bot***** *****ne of the rental property income or loss for this taxable year. This is not the amount the company owed to him.
The K-1 is the flow-through tax liabilities which can be different from the actual cash to be received from the S Corp.
"Retained income" on a 1120S. Do you mean "retained earnings" under the balance sheet, page 4? This number can be positive or negative. This is accumulated earnings and losses the business has had throughout the years. This number is ***** the actual cash in the business. If you are interested in understanding the financial strength and position of this company, it is suggested that you make an appointment with a CPA to sit down and review. Otherwise, by looking at some numbers on a part of a form is unlikely to give you a correct picture of the business.
Please feel free to follow up with questions.
Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP