The IRS is likely to consider the phantom distribution as taxable to you. There are many cases where no money changes hands, and the IRS considers there to be a taxable event.
Given the amount of money at stake, I can't suggest that you take chances that they won't catch it or that your explanation will be enough to satisfy them when they do. Interest and penalties will be added to the tax when they issue the CP-2000, and I don't want to see you in that situation.
In addition to checking with additional CPAs, you may want to reach out to tax attorneys in your area. An experienced attorney may be able to help you navigate this in a way that is more favorable to you.
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