"the shareholders agreed this would be the way the remaining member would "buy" the outgoing member's stock"

"Because distributions must be taken equally by both members"

But neither of these makes sense. You cannot buy out the person using their own distribution, because that would already be part of their ownership position. What you might try is treating that as a Loan to Shareholder (the other shareholder), who buys out the other shareholder as a personal event. See how the S Corp's resources are not used to pay the person leaving; it's a sale that is outside of the S Corp. Then the remaining shareholder repays the S Corp, now being the sole shareholder, with a distribution offset.

At least, I think that's what your shareholders intended, if they had better guidance in advance of their "agreement."