Dissolution of Corp

[erchess]

A client may dissolve effective 12/31/10 an S Corp that has always shown losses and had no activity in 10. How do shareholders deduct their remaining basis, which is substantial? I am looking for an alternative to Sch D but not sure how or if I can. Any thoughts?

I just had an idea. What would be the tax consequences if he sold the essentially defunct corp to someone for de minimis say a dollar and they did as they pleased with it? Could he not somehow make an ordinary loss? Note that all of the owners of the corp have always actively participated.

[BHoffman]

I think your client might run into "economic substance" problems:

http://www.irs.gov/pub/irs-utl/economic_substance_(1_25_05).pdf

[ChEAr$]

A client may dissolve effective 12/31/10 an S Corp that has always shown losses and had no activity in 10. How do shareholders deduct their remaining basis, which is substantial? I am looking for an alternative to Sch D but not sure how or if I can. Any thoughts?

I just had an idea. What would be the tax consequences if he sold the essentially defunct corp to someone for de minimis say a dollar and they did as they pleased with it? Could he not somehow make an ordinary loss? Note that all of the owners of the corp have always actively participated.

Assuming there really is positive basis, it just might consist of two arts, stockholders' loans plus book value of common stock.

Common stock might have been section 1244 (form 4797) while
stockholder loan basis goes directly to schedule d.