Discussion:How do I close an S-Corp?
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Discussion Forum Index --> Accounting Questions --> How do I close an S-Corp?
| 9 January 2007 | |
| Please help, I've never had to close an S-Corp before, and am getting myself confused. The corp has (145,000) (negative)retained earnings, and is posting another 140,000 loss for 2006. All inventory and fixed assets have been sold and booked accordingly. There is an A/P balance of $185,000, which my client tells me will NOT be paid. He has a personal guarantee on the Line of credit, so he will pay that on his own. My question is, do I write off the A/P balance to Misc. Income, or do I just leave it on the Balance Sheet? | |
Tfortaxes@msn.com (talk|edits) said: | 11 January 2007 |
| You state the books exactly as they are. You check the little box at the top that says final tax return. You let the client know they are 100% responsible for their return than give them a bill for your services. | |
| January 11, 2007 | |
| Let's analyze this a little bit. At some point the $185,000 in A/P was presumably deducted (or will be deducted) on the tax returns. Now your client is telling you that these expenses will not be paid. According to Sec. 61(a)(12), gross income includes discharge of indebtedness. As I understand it, there are some exceptions to this, so you may want to do further research. | |
| 28 January 2007 | |
| Could you clarify if this is for GAAP or taxes? I'm not sure....but accounting treatment could be different. | |
| 29 January 2007 | |
| I have a similar situation. How do you log all the outstanding debts on the final return that will be paid by the owner? Can the owner take this as a loss? What type of account would it be zeroed out to in quickbooks? | |
| 29 January 2007 | |
| Close each debt account to the S/H's equity section. This will transfer all the assets/liabilities to the S/H in quickbooks. I use (2) accounts....one for S/H contributions, one for S/H distributions and then net them both for the eoy S/H net distributions/contributions. If the S/H has basis in the corp, then he can deduct the loss from the closing of the business, the rest is a capital loss and is deducted as any other cap loss can be :) | |
Punjabimunda (talk|edits) said: | 26 September 2007 |
| I have a similiar suitation. The client has closed the S Corp and the shareholder has loans from the S Corp. Since the S Corp is now closed, is the Loans to Shareholder considersed Distribution or Income on the indiviual's personal tax return | |
| 13 June 2008 | |
| Hello, I have a question about an S Corp. I started a small baby clothing business about 1 year ago and I have always been a sole proprietor. My business is new (7 months) and I'm not making any earnings in fact currently I spending out of pocket. I am also an independent contractor, I work for a company and get a 10-99 each yr. I was told most companies like to pay (corp) when signing checks to an independent contractor, so that's one main reason I became inc (S corp).
Now I find out that I did not need to be S corp simply b/c my employer still pays me as a sole proprietor and that I would have to pay $800 per yr for having my S corp. How can I cancel? Unless there is an advantage to having it? Please help! | |
| 13 June 2008 | |
| "My business is new (7 months)...." There's problem right there. If in baby business, you must to give it at least 9 month to start percolating. A child born at 10 or 11 months is even more profitable as they need larger clothes, and hence you can charge more. Hence, hope for many late term, health baby in your area. But seven months, nyet!, even Czar Greenpea knows better!
Also, send the Corporate bill to the clothes company, Corporate invoice. If they pay you directly, don't credit the bill, and keep billing on the corporate invoice until they pay Corporation. I'm sure others here will have further good advice. Good luck, and welcome to American system. | |
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