End of LLC

[Corduroy Frog]

James operates an LLC as a single owner. At the end of 2013, he ceases his LLC because he feels he has been misled by his attorneys and fails to see the advantage of an LLC and paying the annual fee to the Secretary of State. The state license to operate as an LLC expires 12/31/13. Beginning January 1 of 2014 he begins to operate as a sole proprietorship. Easy enough.

What is NOT easy enough is his Federal filing. When he formed the LLC he chose to be taxed as a corporation. (For this purpose I don't think it matters whether a C corp or S corp) There was no formal dissolution of the LLC for state purposes, the proprietorship simply continued under the same ownership.

Which of the following is true?

1. He must formally dissolve the C corp for Federal purposes and file a 966.
2. He must continue filing as a C corp.
3. He may do either of the above.
4. Other answer

[Roland Slugg]

Aahhh, yes ... yet another example of the constantly repeated advice to "form an LLC ... it''s the smart thing to do."

If James stopped conducting business via the LLC but didn't formally dissolve it, then it's still in existence and should file F-1120 as long as it remains so.

[taxxcpa]

Aahhh, yes ... yet another example of the constantly repeated advice to "form an LLC ... it''s the smart thing to do."

If James stopped conducting business via the LLC but didn't formally dissolve it, then it's still in existence and should file F-1120 as long as it remains so.

And pay the state fee if applicable.

[Corduroy Frog]

State LLC Fee

I could probably make the situation more definitive if I said the period covered by the State LLC Fee expired on 12/31/13 and will not be renewed...Effective close of business on 12/31/13 there IS no more LLC.

[Gretel]

It might depend on your state if anything more official needs to be done to officially dissolve this LLC ... and it's a legal question. For Federal tax purposes I would think he needs to do everything required by a regular corporation.

[oceanlovin'ea]

Notify IRS

Don't have time to look it up now, but it seems to me that if you stop conducting business as an S corp you must notify IRS. I think there is a form to use. Probably in the TAX BOOK under S corporations.
If the LLC no longer exists, you can't file a return for it.

Linda, EA