It's almost impossible to give you a decent definite response without knowing many details about the distribution, it's fair market value, etc. It may be fine to have no access to the books, but it would be very beneficial to just have access to the accountant preparing your k-1s just to ask him what this distribution might mean to your own tax return.
You might even want to see a CPA or EA for yourselves, so that person can tell you exactly what information you need and make sure you have at least that much data, and to help you understand what happens when you sell and what basis you should be tracking for yourselves. This S Corp apparently involves large sums of money and it would be well worth a small amount to discuss these things with a qualified person to whom you can give all the necessary details.
