Q: Are the letters used to categorize items affecting shareholder basis on Schedule K-1 used every time? For example, on line 16D on Part III of Schedule K-1 is distributions. Is D always for distributions or is there further digging needed every time to discern what that item is affecting shareholder basis?
A: For a Sub S corporation, 16A refers to tax-exempt interest income, 16B to other tax-exempt income, 16C to non-deductible expenses, and 16D to distributions. The designations do not vary. However, distributions may be either cash, marketable securities, or property. 16D does not distinguish the type of distributions. Therefore, you must keep digging by asking the accountant or the taxpayer for that information.
For a partnership or LLC, Line 19 captures similar information but is a bit more specific in some instances. 19A refers to cash and marketable securities specifically, 19B to property distributions with a built-in gain, and 19C to other property distributions. With respect to 19B and 19C you'll need to dig further to get full information. Back to the accountant or taxpayer.
Course overview: Personal Income Tax Returns and Cash Flow