How and when to prepare short yeear S Corporation tax return

[Hamacher]

I have a client that sold his business. It was a stock sale with 338(h)(10) election (deemed asset sale). The sale occurred on 5/21/14. Can someone please confirm when the 2014 return is due and what Forms to use.

Thanks in advance for your help!

[Roland Slugg]

Your reference to Code §338(h)(10) is not correct. That deals with the acquisition of the stock of a member of a selling consolidated return group. An S Corp can not be a member of such a group.

In any case if your client sold his shares in his corp, then the corp continues on, and it will be up to the buyer to make the §338 election, using form 8023, within 8½ months after the month in which the acquisition occurred.

If, instead, your client simply arranged for his corp to sell its assets to a buyer, with the shares of the selling corp NOT changing hands, then §338 doesn't apply at all. If the corp is then dissolved and its cash and any other assets are then distributed to the shareholder, then the corp's return will be due by the 15th day of the third full month after the dissolution.

[Burke]

If you do a short year return before the forms are available for the current year, you just use the last form available, and show the beginning and termination dates at the top in the space provided for a fiscal year.