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@patmag wrote:

We did not have a payroll or W2. I am not sure what select in Business Info -> About Your Business tab under "Did You Pay Shareholders, Employees, or Contractors 2019?"

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You would answer "No" to that question, but then note the "Audit Alert" on the following screen; S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation.

See https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical...

You might want to seek professional guidance with respect to your S corporation income tax return. Further note that Form 1120-S was required to be filed by March 16th of this year (unless you filed for an extension on or before that date), so the return is now past due.

The IRS could (possibly) recharacterize part of the net profit (ordinary income) as W-2 income (salary) but there is not much that can be done to rectify that situation at this point in time. Odds are it will go unchallenged or even unnoticed since the amount is rather small.

A distribution is essentially money or property you withdraw from the business. If you actually withdrew money (or property) from the corporation, then a distribution was made. If you did not, then there was no distribution. Note that shareholders have income tax liability on the net profit of the corporation regardless of whether there were any distributions.