Differentiate between the treatment of S corporation distributions from corporations having no earnings and profits

Per the text and IRC, losses and deductions of an S corporation pass through to the shareholders of the corporation and are limited to the shareholders’ basis in the  Suggest a plan for a client to increase the deductible pass through loss and deductions over the initial investment from a new wholly owned S corporation.

From the e-Activity, differentiate between the treatment of S corporation distributions from corporations having no earnings and profits, and corporations having accumulated  Suggest the most significant reason for the difference in the treatment of distributions. Justify your response.