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    closing s corporation

    I have a client who is retiring and closing his S corporation as of the end of May. What is the proper procedure to closing the corporation?
    I know that I have to notify state - found dissolution of corporation on sunbiz.org. I have filed the final 941 and final state unemployment and marked them as final. I can't file the final 940 until January when the forms are available, correct?
    When do I file the final Form 1120S? Does it have to be done before the end of the year? I found a Form 966, Corporate Dissolution or Liquidation. That says it has to be filed within 30 days.
    What about the S status? Is there anything I do about that?
    What about the assets of the business? most were purchased 5 or 6 years ago. Only a computer and monitor purchased in 2015. These were expensed. They will become personal use property. If he decides to do any work in the future, it will just be as a consultant and he would use the computer for that at that point.
    I am sure there are some things that I am missing. Please let me know so I can do this correctly.

    Thank you.

    Linda F

    #2
    First of all - which state(s) are involved?
    Dissolution is usually approved not by the tax department, but by the Department of State. DOS won't approve dissolution until they get clearance from the tax department that all taxes have been paid. The client is sent a clearance certificate to submit to DOS.

    Form 966 gets filed with IRS. If there's an equivalent state form that gets filed too.
    The tax returns should be filed by the normal filing date - 2 1/2 months after close of business operations. If 2018 forms aren't out yet, then you file extension forms and pay whatever tax liability is due (for state corporation tax).
    In addition to filing final 941, SUI, FUI, W-2, 1099s, you'll also need to file a final sales tax & use form and any other tax form that's normally filed for.

    If there is sufficient funds remaining after all else has been closed out, you prepare 1099-DIV and there's a box to enter Liquidating Distributions.
    File the final tax returns, wait for State Tax Department to send the corporation a Clearance Certificate.

    Each state will have different rules or different sequence of steps.
    Uncle Sam, CPA, EA. ARA, NTPI Fellow

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      #3
      answers

      We are in Florida. No state tax returns are due for S corporations after the first year.

      How would I file an extension? The extension would be for 6 months. I still won't have 2018 forms by then. I have filed the final 941 and final state unemployment tax forms and paid them. I can't file 940 or W-2 until forms are available.
      We don't have a sales & use tax report for this business. Just a service business.
      He is going to take the rest of the funds in the checking account as a draw and close it out.

      Linda F

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