I'm trying to understand a California k-1(100s) form of a friend from the year they sold their holdings in the S Corp. Specifically, I don't understand the difference between box 5a/b, box 16d, and box 17c.

I'll use made up numbers so it's simple / confidential. The share of corporate profit was listed in box a as $10,000. Monthly, if there was profit in the S Corps bank account, part of it was distributed pro rata as "profit shares." The buyers / seller elected to close the books at selling, and by that time, $7,000 had been distributed as profit shares within the short year. The stock was sold for $15,000.

On the k1, there is nothing in box 5a, 5b, or 17c. There is just the $10,000 in box a and $22,000 in box 16d. Is this right? Why would these "profit shares" not be in box 5a or 5b? How are the listings in each of the boxes taxed differently?

I think I understand the difference between box 5a and box 5b from numerous articles on the subject (what qualifies, the reduced rate for 5b, etc.) I don't understand the differences between 5a/b, 16d, and 17c.

Also, the profit in box a increases the basis, right? So, the tax liability would be the tax on that $10k plus ( $22k - $10k - initial basis )@ capital gains rate, right?

Thanks for any help Sorry if this is the wrong place to ask or I am not following the right etiquette in how I have asked.

“On the k1, there is nothing in box 5a, 5b, or 17c. There is just the $10,000 in box a and $22,000 in box 16d. Is this right?”--->Why in box 5a, 5b, and 17c?? I am not sure . However,I guess there is no space to report the profit share distribution, $10,000, in box 5a on Sch KJ-1 of 100S. As long as you have portfolio income(loss),i.e., interest, dividends or etc, amounts on Schedule K-1 (100S), line 4 through line 8 and line 10a, then you need to report the amounts line 4 thru 8 column c and e on line 4 thru 8 on Sch CA of Form 540.I guess in general, gains or losses attributable to the disposition of property held for investment amounts reported on line 7 and line 8 as portfolio income /loss. Line 16 d is total property distributed by the S corp; the fair market value of the distributions need to be reported on line 16d; in this case $7000+$15,000=$22,000.Line 17c is for total taxable dividend distributions paid from accu. E&P as dividends if the S corp has.I mean under current tax law, an S corporation cannot produce earnings and profits (E&P); only C corporations can. However, if the S corporation was previously a C corporation, it may have accumulated E&P from years when it was a C corporation.
“Why would these "profit shares" not be in box 5a or 5b?”--->Column 5 is for ordinary dividends. From the S corp,you receive copy B of the form 1099DIV as a dividend recipient by January 30 of the following year for which the dividends are reported.
“I think I understand the difference between box 5a and box 5b from numerous articles on the subject (what qualifies, the reduced rate for 5b, etc.) I don't understand the differences between 5a/b, 16d, and 17c. “--->As said above, line 16 d is total property distributed by the S corp; the fair market value of the distributions need to be reported on line 16d; in this case $7000+$15,000=$22,000.Line 17c is for total taxable dividend distributions paid from accu. E&P as dividends if the S corp has.I mean under current tax law, an S corporation cannot produce earnings and profits (E&P); only C corporations can. However, if the S corporation was previously a C corporation, it may have accumulated E&P from years when it was a C corporation.
“Also, the profit in box a increases the basis, right? “--->Correct; an income item will increase stock basis while a loss, deduction or distribution will decrease stock basis. Shareholder basis in an S corporation has several important tax effects. Profit or loss of an S corporation is applied to personal tax returns of shareholders. However, a shareholder must have basis to deduct an S corporation loss. Distributions to shareholders from S corporations are not taxable. Only profit is taxable, whether it's distributed or not. But a distribution is taxed if it exceeds the shareholder's basis. A shareholder has a stock basis and a debt basis. The initial stock basis is the amount of equity capital supplied by the shareholder. The initial debt basis is the amount of money loaned by the shareholder to the S corporation
“So, the tax liability would be the tax on that $10k plus ( $22k - $10k - initial basis )@ capital gains rate, right?”--->I guess so; However, as said above; it depends. If a shareholder receives a non-dividend distribution from an S corporation, the distribution is tax-free to the extent it does not exceed the shareholder’s stock basis. Only profit is taxable, whether it's distributed or not. But a distribution is taxed ONLY if it exceeds the shareholder's basis.in general, the money that an S corporation pays to its shareholders isn't called a dividend. Regular corporations also known as C corporations, pay dividends. And those dividends are taxed. But S corporations, in general, pay distributions. And in general the distributions paid by an S corporation to the S corporation shareholders are not taxable to the shareholders.

Wow, thank you so much for the quick answer! Everything you said makes sense to me. I wasn't properly understanding the difference between dividend and distribution, but I think I get it now.

Great post, thanks again! I never expected to get an answer so quickly