"Seems like it was over 6 years ago"

Yes, shoot, I meant to add that. I see we were told "multiple shareholders." And the whole "bought for a shareholder" is odd.

You might stop using the word distribution for this vehicle. That's probably the worst option.

Do the other shareholders have some arrangement that is equivalent in value (even though it might also have been handled wrong, I suppose), or did they approve something very one-sided? There are other options. Example:

Sell the vehicle to the person, at FMV, and list it as $ owed from employee to be paid over time. The employer has the right to bonus an employee through compensation at any time (avoids the distribution issue). A $9851 debt to the employer might require a $12k bonus, taxes compute, and then there is an after-tax net takehome pay deduction that pays for the debt to the employer.

What a mess. I always wonder how these things go so wrong for so long.