TaxGuyBill
Level 15

The individual client owns the LLC/rental, not the S-corporation, right?

You treat it like any other time when the client takes money out of the corporation for his personal use.  They could be buying a bunch of donuts, buying a rental property, or going on vacation.  Withdrawal for personal use is treated the same:  (1) Wages, (2) Distributions or (3) Loan to shareholder.