Husband and wife own each 50% share of a Florida S-Corp. Both performed work for company in previous years. The separated last year and husband is the only one working in the company and on payroll. Wife is not on payroll anymore as she does not work for the S-Corp anymore. 

Now she took/stole 50,000 from the S-Corp bank account and is not willing to return it.

How would I record this?

Reduction to basis? Reduction in Capital? 1099 payment (she did not actually perform any work)? Loan (she is not willing to sign anything)?

I cannot really declare it as distribution as she was still on payroll last year and therefore is considered "active" for another 5 years, as far as I understand. This would mean that at least some of 50,000 would need to be declared payroll (and S-Corp needs to pay payroll taxes on top of it to IRS).

The ultimate goal should be that husband owns 100% but she wants much more money. This all will be decided by the courts in the coming years. Meanwhile I have to do the tax return and don't know how to enter the 50,000.

Nothing is declared in the operating agreement regarding "stolen" money...

Please help!!