I have a customer that opened a S Corp in 2021. Did not use a separate bank account, did not take salary, did not make a contribution to S Corp. 

60k income, 80k expenses. Is it fair to have 20k contribution (difference between income/expenses), -20k net loss and no salary/distribution? Just because I need to have something on the tax return. 

Second option will be 0 contribution, 80k net loss and 60k taxable distribution (since 0 basis) but that looks too extreme. 

I can't find any IRS guidance on this real world situation, but I’s sure he’s not the first.