I have an S Corporation that is a holding company for a C Corporation. There are 4 members owning 25% interest in the S Corporation. Last year, one of the members of the S corporation sold 5% of his interest. Since the S Corporation is fully investing the C Corporation, we sold some shares in the C Corporation. Now, how to we allocated the proceeds directly to the S Corp owner? I know S Corp income/gains needs to be allocated on a pro-rate basis. So, do we make a disproportionate distribution?

S-Corp