I have this logical statement
$$\neg x\lor (x \wedge y)$$
However I do not know what is considered a valid transformation. Normally if there is an $\wedge$ in the middle I treat it like multiplication and pull out some "shared" piece but here I don't know how to use distributive properties.
Practice it slowly, one step at a time, until perfect. When distributing, carefully keep the "nots" stuck to their variables.
$$\raise{0.5ex}{\neg x\vee }(x\wedge y)$$
So both the $x$ and $y$ terms in the brackets need to get a $\neg x \vee$ appended. That is Distribution of $\vee$ over $\wedge$.
$$(\raise{0.5ex}{\neg x\vee}x) \wedge (\raise{0.5ex}{\neg x\vee}y)$$
Now $\neg x\vee x$ is a tautology. That is Complementation for $\vee$. $$\raise{0.25ex}{\top\wedge}(\neg x\vee y)$$
Finally, $\top\wedge A$ is $A$ for any $A$. That is identity for $\wedge$.
$$\neg x\vee y$$
At last, that is all. With practice you will see it as $$\require{cancel}\neg x\vee(\cancel{\color{gray}{x\wedge}} y)$$