Hello,
I am the owner of the original thread, sorry for late response.
Thanks for all the info and advices. Will take these into consideration.
For clarification:
1. As an officer, I did not take any money out from the S Corporation (so no payment make to me as an individual for service (so no yearly distribution/stock/dividends etc.), and therefore no "not report money") so far (due to reason report in #2). So in that regard, that is why I originally thought it is okay (as the law only mentioned "any payment for services performed", but as there is no payment in any form.)
2. Regarding, why IRS so far do not consider the business as hobby is because the business did have some revenue years previously, just by small margin (and not enough even to pay me as an individual with "reasonable wage" (i.e. CA's minimum wage)).
So it is kind in grey area that the business will be at loss if we do make a payment to employee (myself) at "reasonable wage" according to law. My hope is eventually the business will "grow" to reasonable degree to fully able to hire, but may take sometime. I established S-Corp due to the business is a hardware business, so has some legal liability cover about product etc.
