A 2018 tax payer has a C-Corp but prepares his books as a sole proprietor because his contractors licenses is under his name.  He files a timely 2018, 1120 tax return with $0.00 income and minimal expenses.  He has not filed his 1040 to date.  Now in 2020 he would like to amend the 1120 return to show $400k in income and expenses of $340K.  Doing this will save him in self employment tax.

Question:  Is this allowable?  Is this within the IRS law?  Will this make his original 1120 tax return a "Frivolous" tax return?  Will he have late filing fees?  What kind of penalties and interest will he owe and what percent?