So, you feel it is proper to post the SH distributions directly to the RE account throughout the year?  We were previously a C corporation so we keep two equity accounts,  Retained Earnings and Accumulated Adjustments Account.  Of course, we want SH distributions to come from adequate AAA, so you would say to show on the check written for SHD we would put AAA as the 'Expense' account?  Unless there is a way I am unaware of, there is not a way to close the year to AAA.  On January 1 of the following year, I make a JE to DR, RE and CR, AAA.  I also make a JE to DR, AAA and CR,  SHD.  I do this (and do not use AAA as the 'Expense' account on the SHD checks) so that when I review the Balance Sheet I can immediately see how much in SHD we made to date.  If I were to give the BS as a PDF and there were no SHD showing, that doesn't seems informative enough.  I'm currently dealing with how to show all of this on a current year Statement of Cash Flows.  Thank you.