Okay, so the facts include that in 2021, the tax year you are preparing, they took more than basis and also this will be the final K-1 and 1120S? Or, is there going to be a 2022 short year return to close the entity? They dissolved and turned in shares, etc, in 2021? Or, they did not "close" this properly in 2021? You used the word "liquidating" so first, the business needs to have been wrapped up and assets sold or distributed, having gain or loss within the entity, etc. That leads you to the final K-1 and basis. That helps determine if there is liquidation gain or loss to the individual.

I found this reference that has a nice, plain, listing as reference:

https://ttlc.intuit.com/community/business-taxes/discussion/do-you-show-final-liquidating-distributi...