Ordinary business income K-1 S Corp adjustment

 So shareholders were issued a distribution of profits which is less than their % of  ordinary income and they want you to change the K1 to match distributions  .........Doesn't work that way...... 

Who advised them to be a sub s instead of a partnership?

It's a typical error to think that an S Corp distribution is the taxable event. It's a pass through entity, so all of the taxable income is reportable, even if nothing is distributed. On the other hand, distributions are not by definition taxable, since income has been reported as taxable in the prior years. There are a few exceptions, such as, taking a distribution when (as an example) it is only available because of the proceeds of a loan and the business never really had available funds or taxable income.

These are not Dividends.

These are shareholders. Shares is how you determine who owns how much of the whole.

This is an S Corp for some reason that they don't seem to understand.