Tax Law (Questions About Taxes)/First Year S-Corp


Mr. Stancil:

I just formed a PLLC, Subchapter S this month.  I am using this corporation to purchase the assets of another corporation on 1/2/2014 (veterinary practice purchase).

I know I will have to file a tax return for 2013; however, I do have a few questions that I'm seeking advice on:

1) I have made some payments from my new business, already, for things such as attorney fees in reviewing the buy/sell agreement, a practice evaluation of the existing business, closings costs prepaid to the bank for the business loan, and some required insurance (disability, etc.) required by the bank.  The organization costs are going to be less than $5,000, and the other costs are going to be less than $5,000.  I anticipate a first year loss of about $10,000 since I will have no revenue.  Do I get to deduct this loss in my first year or will I have to carry it over to 2014?

2) Since I am not actively conducting business in 2013, do I still need to pay an officer salary?  Obviously, I will have a salary in 2014, but I didn't know if I needed to pay something for 2013 of if the IRS waives that requirement for the start-up year.

Thanks for the advice - I have been Goggling online, but I haven't really found definitive answers yet.

Thanks a bundle!


Thanks for your question.

1) Yes you can deduct the loss in 2013.

2) You do not have to pay a salary, as there is no revenue from which to pay one.  It is not so much a matter of being a start up year, it is that you have not generated any revenues or profits.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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