When this guide is useful
A profitable S corporation pays distributions while shareholder basis records lag behind the books.
The distinction that matters
Cash availability and retained earnings do not establish a shareholder's stock basis. A distribution review needs the shareholder-level history and relevant adjustments.
A worked situation to investigate
Two owners receive equal cash distributions but contributed different amounts and have different prior-year basis histories.
The example is illustrative. Begin with the underlying event and its source documents, then separate missing facts from disagreements about their treatment. Work through the checks below in the order that matches your file, rather than treating a completed checklist as a tax conclusion.
Build a traceable handoff
Identify the affected person, entity or property and the relevant period. Keep original evidence, corrections and the reviewer's written conclusion connected. If the facts change after review, preserve the earlier version and ask whether the change affects implementation.