The ROBS schemes require the use of a Corporate 1120 to report the business income and expenses.  But because the only shareholder is the 401k of the owner ( providing all the initial funds), there are lots of prohibitions on how the owner can use those funds.- ex- salary should only come out of operating income.

The business is in the process of being terminated in 2022 because it did not turn out to be a profitable venture and the remaining funds will be put back into a conventional retirement plan for the owner.

The required 5500 filing was already done by the plan administrator. I have to file the 1120 and the 1040 for the owner for 2021.

Just hoping someone else with a more creative approach might have some suggestions regarding ways to minimize the damage. All I can think of is correcting the W-2 to zero but I have no experience trying to claw back SS and other taxes paid, so I imagine this is not feasible..

I know the DOL frowns on the incorrect use of the funds for salary, any idea of enforcement penalties etc?