Closed corp

[DTS]

Some weeks ago, I started a thread under "delinquent payroll taxes", in which I wanted to know about reclassifying workers to employees. The owner IS going to file all the past due returns and pay these payroll taxes, but need to know something.

This corp closed down all business activity, bank accounts, etc. the last week of November. Now that he's going to pay the back taxes, from where does he do this, his personal checking account?

Any help on how to go about this would be appreciated!

Thank you,

Dennis

[Bees Knees]

Since the corporation as an entity no longer exists, and he is personally liable for the payroll taxes as a responsible person, he pays it out of his personal checkbook, and gets a capital loss deduction on his personal 1040 for any expenses he pays for the corporation out of his personal funds.

[JohnH]

Applying payments

If the corporation is out of business and the responsible party is taking steps to pay off delinquent taxes from his personal funds, he should be very careful to designate the payments. If he properly designates his payments to the trust fund portion of the payroll taxes, he won't have to pay the matching taxes or penalties. Those amounts would be assessed against the corporation and if it is legitimately out of business they won't need to be paid. This could save him thousands of dollars, but it must be handled exactly right.

[BOB W]

Since the corporation as an entity no longer exists, and he is personally liable for the payroll taxes as a responsible person, he pays it out of his personal checkbook, and gets a capital loss deduction on his personal 1040 for any expenses he pays for the corporation out of his personal funds.

Bees> does that apply to trust fund monies ( personal deduction on 1040), are you sure?

[Davc]

Bees> does that apply to trust fund monies ( personal deduction on 1040), are you sure?

The trust fund portion was already expensed as wages by the Corp so no.