Business & farm

I will provide some commentary and thoughts to help you in reaching a decision:

1. S corporations are pass-through entities, and as such, all earnings pass through to the shareholders and are taxed at the individual level.
2. Since the income is taxed at the shareholder level, S corporations typically make distributions to cover the tax impact that the shareholder incurs.
3. Your facts state "...make no profit".  If that is the case, then your comment "...stop having to pay K-1's" does not make sense.  If the S corporation is not making a profit, then your K-1 is not passing through profit and hence there should not be any tax implications to the shareholder.
4. As an S corporation shareholder, you should be maintaining a basis schedule of your investment in this business.  This starts with your initial capital contribution, any subsequent capital contributions and is adjusted annually by the applicable lines on your K-1.  The basis schedule is extremely important as it provides the information as to whether losses can be deducted by the shareholder and ultimately provides the information to determine a gain or loss upon disposition of the S corporation stock.
5. Until you sell your S corporation stock, you are required to continue to report the activity on the K-1 you receive.
6. Consider asking the other shareholder if they want to purchase your stock.  Keep in mind that you will need to know your basis to determine your gain or loss on this sale.
7. The comment "...the company is essentially folding up, though not in the legal sense" seems to indicate that you should have some internal discussion as to the viability of the business model and whether the business should continue or liquidate (legally).