Let's examine this part: "since he didn't 1099 it."

When you work for an S Corp, you are an Employee and get paid through payroll and get a W2.

If you are a shareholder, you never get a 1099-M from your own entity.

All of which means this: "The question is shouldn't the K-1 loss of ($50,000) be deduct from the $70,000 and leave a balance of $20,000 as income??"

Likely is not the right question to be asking. It seems the 1120S might need to be amended and payroll for 2019 needs to be fixed.