My understanding of basis held in an S-Corp is the amount of money that I have personally invested. Maybe I understand the concept incorrectly.
The S-Corp is the entity that is paid for consulting work that I do, so didn't really need any significant seed funding (only enough to get the business license and initial insurance premiums, which were paid back after revenue started coming in). And the distribution was surplus funds that the S-Corp collected from my clients that weren't paid to me as W-2 wages.
Would the distribution in this case be more like a qualified dividend than capital gain? I hold 100% ownership of the S-Corp.
