Closing down a corporation

[Skate1968]

I would like to close a small S corporation as of 9/30/14 -- within a few days. Because id just prefer to NOT do a fourth quarter payroll

But then after 9/30 i will need to submit checks for payroll. And one check to the city. And possibly two or three other miscellaneous checks. Not much money at all. Maybe a few hundred tops.

This corporation is on a cash basis.

First Question:

Will that cause a problem? Would writing out a few checks after 9/30 be be considered 'activity?' And therefore prevent me from closing corp by 9/30?

Would sending out a few checks require me to keep it open past 9/30 do then do a fourth quarter payroll?

Second Question:

The sole shareholder will commence operating as a schedule C after S corporation is shut down. But he will receive income under the corporation's EIN. I'd guess that we will need to have to submit new tax payer ID accounts to all of his clients? And have this done before final return is filed?

After final corporate return is filed is there any kind of way to inform the IRS that any income misappropriated to closed corporation will be recognized by sole proprietor on 1040?

Perhaps i should have started work on this a while ago.





Other info:

I've done many S corporate returns but have never dissolved a corporation.

After shutting down this corporation the business asssets will be sold to the sole shareholder. He will operate the business as a schedule C.

I am already aware of all the items on the irs checklist.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Closing-a-Business-Checklist

And I do plan on filing articles of dissolution with state and obtaining a tax clearance certificate. Pennsylvania.

This is s corporation is just one guy who's semi retired. Very little activity. Perhaps the short year return will be only 15k in revenue.

And yes, I am aware that this corporation should have been closed some time ago.

Thanks for reading.

[Roland Slugg]

Would writing out a few checks after 9/30 be be considered activity?

Absolutely. A corporation is not dissolved until it has paid all its bills, sold or distributed all its assets to the shareholder(s) and filed the necessary documents with the State.

Would sending out a few checks require me to keep it open past 9/30 do then do a fourth quarter payroll?

The corp doesn't have to "do a payroll" unless there are employees who need to be paid.

[cjs]

Sale of Business Assets after closing

Hello:
I think the rules are pretty much the same, whether small or big.

Query: How you do plan to account for the few checks to be written after the closing? Perhaps the payments of those bills will be outside of the 1120S? Are you going to pay with corporate cks, personal cks, cash?

On payroll, I expect you recognize the W2, W3, 940, Penn W2, W3 etc. need to be filed in Jan 2015?

I suspect the sale or exchange of the business assets by the corporation is/are a taxable transaction.
Thus, I believe the corporation cannot be closed until the sale of assets is complete.

Selling 1120S assets to 1040C might create taxable income if sale price is > basis?

I think the assets (mostly cash I guess) of the Corp need to be distributed to K1 before closing 1120S.

The distribution of cash for stock may create a taxable transaction also?

Just a few thoughts to share for your considerations.
cjs eom.

[Skate1968]

thanks roland

Would writing out a few checks after 9/30 be be considered 'activity?' And therefore prevent me from closing corp by 9/30?

Would sending out a few checks require me to keep it open past 9/30 do then do a fourth quarter payroll?.

Absolutely. A corporation is not dissolved until it has paid all its bills, sold or distributed all its assets to the shareholder(s) and filed the necessary documents with the State.

The corp doesn't have to "do a payroll" unless there are employees who need to be paid.

Thanks for responding.

So obviously i'll need submit zero balance payroll tax returns for forth quarter 2014. I'll need to keep it open longer because i can't get all that done by 9/30.

Can't get that done without having any "loose ends"

[Skate1968]

thanks cjs

Thanks for all of this cjs

Lots of good points. But most of that stuff i had already accounted for

On payroll, I expect you recognize the W2, W3, 940, Penn W2, W3 etc. need to be filed in Jan 2015?

I assumed that i could file them before january 2015 if i filed a short year return.