In lay terms, a distribution is another way of saying a payment to a shareholder, partner or member of the business’s profit. Typically the distribution is in the form of cash, but sometimes it’s in the form of property like an asset. What you receive typically depends on your percentage interest in the business. So if a business has a $100 profit, and you own 40% of the business, then you’d receive a distribution of $40. The tax law surrounding distributions (and allocations) is complex; if you are involved in a venture that’s making distributions, you should be sure to have a solid CPA or accountant on your team.
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