What does the shareholder stock and debt basis limitations tell the IRS?

Are they taxing me on just the net profit for the year? What are they doing with the number which is this year's profit added to the previous years? Are they using this number to know what to tax me on?

 

If not, which question on Turbotax Business is telling them what I will report on my personal taxes to get taxed on? Distributions made to shareholders?