S Corp investment and Expense. Change of activity code.

[Ausie]

For about ten years I generated income through my S corp. I retired at the end of last year, and will be concentrating on writing.  This is a completely different activity.  I invested $9k in the company and incurred about $7k in startup costs.  It is the first year with an operating loss. The name has not changed, but the activity has.  On the books this is a loss for the financial year.  There was no K1 income reporting. 

Can the expenses be reported Startup cost?  Can I use same schedules, or should I use a different approach to filing?

[HelenC12]

Yes, you can report start-up costs. 

• Startup costs are deductible. Startup costs can be anything from market research and analysis to scouting out locations for your business. They can include the costs of training staff, legal fees and establishing vendors and suppliers.

No, don't use the same schedules. Set up a new business in TurboTax since it is a new activity therefore a new business.

The S-Corp should issue you a K-1 for tax year 2021.

•  S corporations must file an annual tax return on Form 1120S. The S corporation provides Schedule K-1s that reports each shareholder’s share of income, losses, deductions and credits. The shareholders use the information on the K-1 to report the same thing on their separate tax returns.

Related information: 

• How do I issue a K-1?

[LudwigVan_fan]

I'm not sure how TT business for 1120S handles things.  You indicated that you are using the same name.  This implies you're using the same Corporation...or, did you dissolve the S corporation?  If using the same corporation and EIN and same name, you would use the same forms.  I'm presuming you did not make it complicated and form a new subsidiary corporation...just the same corporation, kept the S election and merely changed the activity?   Thus, the same form is used.  For the actual Form 1120-S, even if the corp had different activities, they would be groped on the same line items on the form.

However, I do not know how TT Business for 1120S handles that.

Since you've changed activities, your new activity code for the S Corp might fall into 711510 - Independent Artists, Writers, & Performers.

But, on an actual F1120-S, there aren't several schedules for different activities.

As for startup costs, IRC Sections 195 &  248 along with regulations govern the amount of deductions for startup costs.

Here are a some links to help you:

Instructions for 1120-S

https://www.irs.gov/instructions/i1120s#en_US_2021_publink11515kd0e2778

Form 1120-S

https://www.irs.gov/pub/irs-pdf/f1120s.pdf

Startup Costs

https://www.irs.gov/pub/irs-pdf/p583.pdf

https://www.irs.gov/pub/irs-pdf/p535.pdf