More Brain Dead than Bob

[BHoffman]

I'm trying to prepare a final SCorp return. There are organization costs that have been partially amortized.

Is that a Sec 1231 on form 4797? What is the "sale price"?

Also, there's a bad 'Loan from shareholder' for about $50k. I'm struggling to figure out what to do with that.

[Bees Knees]

TTB, page 8-19:

Disposition of business before end of amortization period. If
a business is completely disposed or liquidated before the end
of the amortization period, deduct any remaining deferred organizational
and start-up costs on the final tax return for the business
to the extent they otherwise would qualify as a loss from the
business.

Thus, even though the un-recovered cost of organizational costs shows up as an asset on the balance sheet, it’s not really a sale of an asset. It is treated as an expense and deductible on the final S corp return in the same spot that you were deducting amortization each year.

The loan from the shareholder disappears. Any loan basis left is included in the shareholder’s basis for figuring gain or loss on exchanging stock for the remaining corporation assets upon liquidation.