Hi Bill, 

Thank you for your input. Here is my understanding about retained earning after search. 

Retained earning is after tax money, the tax is paid on Sch E on 1040 through K1. 

if retained earning stays with 1120S, if distribute, it is called owner's draw, it is a no tax related transaction.

If retained earning stays with 1120C, if distribute, it is called dividend, it will be distributed by 1099div. 

Please correct me if I am wrong.