If a S-Corporation has only taken funds from investors and used these to pay expenses, should they have provide the investors with K-1's? There has been no income in this S-Corp so far.

ANSWER

The BIDaWIZ Team's Answer:

The S Corporation should issue Schedule K-1s to its shareholders after the end of the year as the loss can be claimed on their personal tax returns. We're assuming that all shareholders have basis in the S Corp via their investment. If that's the case, then they can offset it with the losses per their Schedule K-1.