You could be right on the repayment, now that you phrase it that way, I'm not entirely sure, as I haven't run through that situation in a number of years.

EDIT:

I did just find this on google

"S corporations, in general, do not make dividend distributions. They do make tax-free non-dividend distributions unless the distribution exceeds the shareholder's stock basis. If this happens, the excess amount of the distribution is taxable as a long-term capital gain."

I had been thinking that it was Basis that mattered that distributions not exceed, and I feel like this says the same thing