Just as a point of clarification, distributions are not taxable to the extent that a shareholder has basis in the S corp stock.
In addition, there is the possibility that a distribution can be taxable if it exceeds the AAA (accumulated adjustments account) and there is E&P (earnings and profits). This occurs if the S corp acquired a previous C corp that had earnings and profits or the S corp was a previous C corp and converted to S corp and also had E&P.
If the later is a possibility, you need to get some professional tax advice to understand how this works.
*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.
