@HOPE2I Don't think you understand (or it is me).

You said "You’ll need to pay reasonable compensation only if you (and/or other shareholders) perform service for the S-Corp."

That statement stands for itself.  It has nothing to do with distributions.  If they made a profit and they perform services for the S-Corp they have to pay themselves a salary.

Example:  If the S-Corp makes a profit of $100,000 and the Sole Shareholder provides services for the S-Corp they have to pay reasonable compensation.  They cannot say "I took no money out so I don't have to pay myself a salary".

Dusty

PS:  If I am wrong please educate me!