We have a semantics issue here, apparently.
S corporation distributions are tax-free provided they are not distributions reported on a Schedule K-1 that represent ordinary income for the current tax year (and do not exceed basis otherwise). In that case, the K-1 income is reported on the recipient's income tax return whether there is an actual "distribution" or not.
Regardless, since reference has been made to a distribution (K-1 income) as a "considerable sum", I thought it might be worth mentioning that an S corporation is required to pay reasonable compensation to a shareholder-employee in return for services rendered to the corporation.
