"There are 5 shareholders and they decided to let him keep the vehicle."

Which is why it should be changed from the concept of Distribution to more like a sale/purchase.

"This is why I was thinking of issuing him a 1099 for the sale."

No, that's is not called for, even if none of their good intentions had come into play. If you sell it to me, you don't also issue a 1099 of any sort. A sale of a vehicle doesn't warrant a 1099. You can't try to use a 1099-anything to bypass something that is supposed to be in payroll.

I gave how to accomplish it, in payroll. Give him a bonus, and then use the net of the bonus to "buy" the car. Done and legit. Do it in 2024. Put it on the books for the end of 2023. What you are doing is disposing of a tangible asset (the vehicle) by turning that value into an amount owed to the corporation (which also is an asset).