Ok. Assuming that this individual is maintaining your basis and understands how to arrive at the amount that is being reported on line 17 of your K-1, this is capital gain and reported on your 1040 Schedule D and applicable 8949.
Just show the "gain" amount from line 17 as the proceeds with a zero cost basis. You can just use the name of the S corporation in the description of property column. Enter the date you acquired the S corporation stock and the date of the repayment that caused the gain.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
