dissolved corporation expenses

[Maggie]

C corporation dissolved, and filed final returns. Corporation (owner of corporation) then was sued by disgruntled salesperson for back commissions. Owner of corporation settled and has to pay $10,000 in commissions. How can he get tax benefit for paying these expenses now that the corporation is dissolved. And under what ID number does he issue a 1099 to the salesperson?

[ChEAr$]

C corporation dissolved, and filed final returns. Corporation then was sued by disgruntled salesperson for back commissions. Owner of corporation settled and has to pay $10,000 in commissions. How can he get tax benefit for paying these expenses now that the corporation is dissolved. And under what ID number does he issue a 1099 to the salesperson?

I don't understand this. How can a dissolved corporation be sued?
when a corporation is dissolved, that person (under the law) does not exist.

Or do you mean the owner of the corporation was sued?

Something does not make sense.

[JohnH]

Harlan: I had the same question, since if the corp is dissolved there wouldn't be anyone to sue, and even if a lawsuit succeeded there wouldn't be anyone to collect from.

Either the shareholder was personally sued or else he decided to pay the commission out of a sense of obligation, to make the nuisance go away, or some other personal reason. If that's the case I think he's going to have a hard time deducting what was essentially a gift to the sales rep. And he won't have to worry about how to fill out the 1099 - there won't be one.

[erchess]

TTB 1040 Ed 3-20

lists back pay among the taxable proceeds from a lawsuit and contains a statement that means to me that the sue-er should receive a 1099 for any taxable amounts. Now there's obviously no one except the sue-ee who or his hired help who would issue the 1099.

Now if my client showed me that he had prepared or paid me to prepare a 1099 and convinced me that he had paid an amount to someone who sued (him or his defunct corp for which he chose not to invoke or had punctured the corporate shield) I personally would deduct the sum paid from his taxes, if necessary using a Sch C marked as the first and last year of operation. I would however do proper disclosure so as to avoid preparer penalties.

By the way, in NC it is not hard to pierce the corporate shield of a single owner corporation. That is a question of State Law.

[Davc]

If the TP is entitled to a benefit at all, it would not be a Schedule C transaction. If a shareholder assumes a liability of a corp on dissolution then it is a Schedule D loss when paid.

[ChEAr$]

Eggs....ackt ...ly

If the TP is entitled to a benefit at all, it would not be a Schedule C transaction. If a shareholder assumes a liability of a corp on dissolution then it is a Schedule D loss when paid.

schedule d rather than any other.

[erchess]

Sch D

TY for the correction.