It sounds like your k-1s were issued correctly and you need to be sure to reduce your basis in the s corporation by the cash/property distributions taken.
Box 16D of the Form 1120S Schedule K-1 is the box where you would report cash or property distributions taken from the s corporation. They are both treated the same way.
The way the K-1 works is this:
You must claim the income earned during the year in box 1 as taxable income on your 1040. Then, if you take cash or property distributions from the s corporation, then you must reduce your basis by those.
S corporations do not generally use Form 1099-DIV to report dividends (cash or property distributions to shareholders) because they would report them on the Sch K-1 box 16D.
Here is the instructions from IRS Instructions for Sch K-1 box 16D (Form 1120S):
Code D. Distributions. Reduce the basis of your stock (as explained earlier) by distributions, not reported on Form 1099-DIV, of property or money. This amount will include any amounts included in income with respect to new clean renewable energy, qualified energy conservation, qualified school construction, build America, or (for bonds issued after October 3, 2008) qualified zone academy bonds. If these distributions exceed the basis of your stock, the excess is treated as capital gain from the sale or exchange of property and is reported on Form 8949 and Schedule D (Form 1040).
