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.