Sole proprietor issuing a 1099 to him self

All it is is an owner draw - there is no 1099 to a sole proprietor. I'm also assuming the loss is from depreciation or section 179. Do they show a loss because of this distribution? Was it shown as "payroll" or "independent contractor"? and should be taken out of the loss?

"Was it shown as "payroll" or "independent contractor"? and should be taken out of the loss?"

Exactly. Either of these creates expense, which doesn't apply to a sole proprietor working their own business. The taking of his own business funds is never expense. It doesn't matter if you call it Payroll expense or Subcontractor expense, because neither is true. It's not Expense. And you are not a cost to your own Sched C entity.

"If an S-corp a 1099 could help."

Nope. If you are working for the corporation doing the work of your corporation, that is payroll and that is when reasonable wages come into play. You don't get a 1099-NEC from your own S Corp unless you have another business that did that service to the S Corp. You don't issue yourself a 1099 for the corporation you own and did the work of that corporation. It won't "help."

"Does the withdrawal create a basis issue?"

Taking money from a Sole Proprietorship is not a taxable event. Even if the money became available from the proceeds of a loan, that is not a taxable event. The point to consider is the person and the business are treated as one and the same. That's why it is referred to as a Disregarded Entity. It's not got a Balance Sheet like a corporation. And if that is a loan, there is no separation between business and self for that liability. A corporation can get a loan or lend to a shareholder or employee. A sole proprietor cannot lend to themselves or borrow from themselves; there is no separation of these activities.