CA S Corp Annual Tax

[rkhan71]

I am sure this has been beat up a few times with questioning, but want to be sure of answer. Client filed for active corporation on June 2012 (activated); did not actively open doors until 2013. However, even then the S Corp did not have any earnings etc., no Net Profits and closed (dissolved effectively with SOS in late 2013).

Filed first and final tax return in 2013. No $800 due for 2012, and software did not pickup 2013 $800 payable. Main question at this point is whether the shareholder has to pay the $800? There are no assets etc., and a letter came (from CA FTB) requesting $800 + penalties and interest, for $821.96 total sum for S Corp. Does anyone feel that the sole shareholder should be worried about the $821 (have to pay from their pocket), or should some other circumstances apply. In other words, does this individual have to pay out of pocket for the corporate liability, since closed, etc.?

Thanks for your help.

Ray

[S T]

Calif is $ 800 on 2nd year - first year is a free pass for S Corps

I have had a few where I called in and the S corp at FTB said do nothing if S corp closed --- however, if the client decides to open a new corp (they do track shareholders - mostly for single or 2 shareholders) in future years in Calif will be "tagged" for all of the accumulated $ 800 fees and penalties.

Shareholder can choose to pay or not pay - if shareholder pays you can deduct on Sched E page 2 - as unreimbursed.

With Calif it is a "no win" situation. Pay now or pay later! - They will continue to send notices! Remember Calif is "financially in the pits" so they will do all they can to collect.

Good Luck!

Sandy

[rkhan71]

Thanks

Thanks, Sandy. I guess we will set up an IA so that if client wishes to revisit a new business venture they are clear.

Thanks, again.

Ray

[Roland Slugg]

There are many articles available on the internet that address your concern. Here is one: https://www.caltax.com/spidellweb/pu...vingCALIVE.pdf

In a nutshell, if the dissolved corp did not make a liquidating distribution to the shareholders, the FTB will not attempt to collect any outstanding tax from them. If I were the shareholder of such a corporation, I would not pay the $800 of of my own funds.

[rkhan71]

Thanks Roland

I will check it out.

Ray