how corporation & shareholder report distribution of property to shareholder?

Answer 1

A distribution from a corporation comes in two forms. One is a "return of capital" on which no tax is due since these are your after tax monies invested previously which are being returned. Your cost basis (the total amount that you paid for the stock) would have to be reduced by a like amount. When your cost basis reaches Zero ($ 0.00), future distributions will be taxable to you, the shareholder.

The second is a dividend distribution, be it money, or stock, or anything of value. These things are taxable (See Sch. C - US 1040) to the shareholder. The corporation will send you a form at the end of the year, a copy of which they have sent to the government.