I am one of two shareholders (both are officers) of an S corp that we dissolved in 2012. We had a business loss for the year, but distributed the retained earnings to each shareholder based on % of shares owned and liquidated all assets. Do I report those distributions on 1120? On K-1? And where do they get reported on the Individual returns?

“Do I report those distributions on 1120? On K-1? “=======>NOT on 1120S. Basically, as S corp can(can’t) have r/e;an S corp is pass through entity where stockholders receive a K-1 statement showing the company’s profit/ loss once adjustments are made to the AAA/ stockholder’s basis account. Each shareholder’s K-1 is then used as part of calculating his or her personal tax return and the S Corp is not taxed. S-Corps can distribute already-taxed money to their shareholders without having to call it dividends. It shows on Sch K and K-1 as a "distribution" of cash or property. No 1099 would be issued, and the distribution is not a deduction from current income. AS LONG AS a distribution is in excess of stock basis it just gets reported on the M-2, Sch K-1, and the shareholders will have a capital gain reported on form 8949/ Sch D and 1040.

“And where do they get reported on the Individual returns?”===>Sch K1 and on Sch E of each Sh’s Sch E or Sch D/8949(for capital gain) and on 1040..Sch 1120S K-1 does not track the entire basis of the shareholder, however, and the shareholder may need to keep independent records