trailingedge22
Returning Member

First Year S Corp in 2018 Worked both W2 and 1099 (Corp-to-Corp)

In 2013 I stopped working due to a "mystery disease".  In 1984 I was disabled in an accident and considered to be totally and permanently disabled and given SSI.  Just the same I returned to work in electronics, got a BSEE degree then worked as an Electronic Hardware Engineer until 1999 when I started working contracts exclusively until 2013 when I was put back on disability (SSDI) due to the mystery disease.

 

Before getting diagnosed with a yet to be named autoimmune disease, I started an LLC so that I could buy used laptops in bulk, refurbish them and sell them on eBay.  ( Microsoft will give you low-cost Windows licenses, but you have to be a business.)   After getting diagnosed and starting effective treatments I decided to make the business an S Corp on 01/01/2018 and hit the bricks to get work.  

 

The goal was and still is to eventually develop and sell my own IP or work on custom projects, but that would require capital and experience with the latest technology which would only come by working contracts again.  It took a lot of money and effort, but I was able to land a W2 contract in August.  

 

I was trying to get a Corp-to-Corp (1099) contract but after 5 yrs on the bench, I was lucky to get the W2 contract which is not income to the business.  In December I landed a Corp-to-Corp contract and the S Corp took in < $5k for the year.  I continued to work the contract through October 2019 and left for a better opportunity working another 1099 contract which ended In April during the COVID madness.

 

In early 2018 I had to enlist the help of HR Block to deal with IRS problems regarding 2017 IRA distributions which I was completely entitled to take.  With all that and just being too busy to deal with this new S Corp thing, I never filed 2018.  It was just too confusing and the work at FLIR consumed all my mental energy as it was a crucial contract for the priceless experience as well as the very much needed income.

 

Now that there is time to process all of this, I am trying to file 2018 and then 2019.  I have Excel spreadsheets for both years with the expenses still being sorted out into their respective buckets as I learn the intricacies of operating and filing taxes for an S Corp.

 

So here's where I stand.  In 2017 & 2018 I spent a good deal of $$$ getting this S Corp off the ground.  Computer equipment, electronic components, instrumentation, and much travel meeting with old colleagues and managers before landing the W2 contract nearly 3,000 mi from home.   I was still getting disability payments and the W2 money all going to my personal income.

 

Should I or better yet, can I deduct the travel and other expenses from up to the date I started the W2 and then the interim btw the W2 and Corp-to-Corp contract?   I'm 99% sure I need to do the 1120s for that last quarter of 2018 when the S Corp was the recipient of the contract $$$.  Is there anything special about the first year of doing business as an S Corp?   I spent more money than I made for sure in 2018, yet it seems I'm in danger of actually owing the IRS and facing some harsh penalties.

 

The 2019 return is partially done, but 2018 needs to be finished first.  All of the expenses in the 3rd qtr are needed to go for the W2 contract out in CA.  (I believe I am legally obligated to keep the expenses from the W2 completely separate from the S Corp.)  The Corp-to-Corp contract was ~300 mi from my residence and deductions should annihilate what little income the company took in. 

 

What if I take a loss in 2018 on the business side?  Can this help me in 2019 where all income was to the company side?...

 

...I think I'm going to be sick.