Initial year S-Corporation with no business activity

[john_gl]

Late last year (2019) I formed a new Delaware company and was given S-Corporation status. I am the only shareholder. However I only started operating the business early in 2020. 

I didn't file a Form 1120S this year (for 2019) and have now realized that I should have filed this form even though there was no business activity to report. However I have a few questions:

1) Given that there was no income or other business activity, my K-1 also shows no income. Do I also need to file an amended 2019 personal tax return to include this K-1?

2) Are there any tips to avoid paying late fees for filing a late Form 1120S with no income?

[Anonymous · Accepted solution]

1) Given that there was no income or other business activity, my K-1 also shows no income. Do I also need to file an amended 2019 personal tax return to include this K-1?  No

2) Are there any tips to avoid paying late fees for filing a late Form 1120S with no income?

enclose with the return a signed and dated letter that requests waiver of first time late filing penalties.  say you were unaware, until informed by a pro, that a no-income return needed to be filed.  no harm was done because there was no activity to report. also state that you have taken steps to avoid late filing in the future.  then request late filing penalties for 2019 be abated.

usually this is granted for first time late filers but it is still at the discretion of the IRS.  Keep a copy of the letter in case the IRS does bill you. then return the notice without payment and a copy of the letter noting that a copy of the letter was included with the original return.  if the IRS denies your request you should get a notice to that effect.  

by the way, if your S-Corp is operating in 2020 don't forget about the need to take a salary.