My Late S-Corp Election was approved in January 2018, too late to file a W-2 for 2017. Is it ok to file a 1099-MISC?

A couple of questions:
1) Did you actually pay yourself wages?
2) What was your income level for 2017?
3) Did you make distributions to yourself; not wages but distributions
4) Are you the only employee?
5) I want to understand what you mean by "late S Election".  Is it late because it was approved after 2017 or was the election actually filed late?

We are an Arizona LLC, that filed an election to file as an s corp (form 2553).  We filed late and it wasnt approved until january 2018, but it was approved retroactively starting january 1st 2017. I did not pay myself wages, because I was an LLC, so I wasn't supposed to, but now filing as an s-corp, I am required to take a wage, but its 2018 already, and I only took distributions for 2017 (owners draw). There are 3 employees that receive a W2, and the LLC income is about 250k per year.  I use ADP for payroll, and they wont accept reporting wages after 12/31.  I've heard it's "ok" to file a 1099-misc and report is as officers compensation (line 7 on 1120s).  In 2018 I will be taking a wage, so I won't have this issue next year, but the timing didn't work out this year.  Just wondering what the best way to handle this is.

You've got a little quagmire here and no real good answer.

• ADP is a little rigid sometimes.  In your example, you could indicate to them that some of your distribution should have been wage and they could amend the forms.  However, they will probably not do that.
• Even if they amended, the taxes would be late and you would be subject to some penalties; not the end of the world.
• I do not recommend issuing yourself a 1099 as that is not the proper reporting mechanism.
• The IRS does scrutinize the S corporation arena where the company is profitable, take a distribution but does not take any wage.
• I would file your return just as it is and how everything occurred.  You may or may not receive a notice.  If you do, then you just respond with the same facts that you presented here; late election for S status, not sure if it would be approved, can't pay wages as an LLC, year end was over once approved retroactively AND the big final piece is that this matter was corrected for 2018.  They should accept that.  It may take a little work (correspondence back and forth or phone calls), but you should be ok in the end.  It may need the involvement of a tax professional at some point to step in on your behalf and work through the redtape.