This is a Tax accounting question !

Suppose that instead of distributing 100,000 pro rata. The LLC distributed 35,000 to A and 65,000 to B.

A (30%) B (70%) Pro rata 30,000 70,000

Now 35,000 65,000

Questions:

As the CPA, would you have any suggestion for the shareholder to reverse any negative consequence from this distribution? S corporation

note: (you receive their books after year end and reversing the transaction would probably involve making journal entries. Is there a way these distributions could be recharacterized that would make them more appropriate for an S Corporation?)