FUBAR S corp

[JoshinNC]

I have a new client that I met with a couple of nights ago who, among other things, have an S corp that went bankrupt in April 2007. Prior to the bankruptcy they operated the S corp at what I would presume would equate out to being a loss (otherwise why would it go bankrupt). Client's basically abandoned their showroom with all the office equipment and displays for the landlord to take and sell to recover past due lease payments. Lo and behold, former partner hears about this and goes to the landlord and tells him that he is going to "take over" the operation and pays the landlord the past due lease payments. The landlord hands over the keys, the former partner cleans out the place and is not to be heard from again. My client calls the police and they tell him, "This is a civil matter", so no police report.

Here's my problem. The computer equipment had all the income and expense info on it. Therefore, it is virtually impossible to prepare a return of any sort for the business. How should I handle this.

At first blush I thought casualty loss. But, with no police report I don't think that would work. Then I thought capital loss on the value of the shares (if any real value due to prolonged losses).

I'm totally at a loss for any explanation to the client on how to proceed. Should we file a return for the S corp? How do we treat the "lost" items of inventory and equipment? What info do we use to prepare the returns.

Any help would be greatly appreciated, as I'm unable to figure out how to handle this.

[ChEAr$]

S corp

I would love to advise that you get client to produce his backup disk and go from there.
But I probably know the answer to that one.

Anyway, STarting point would be to obtain duplicate bank statements for the period the
corporation did business. It may also take a corporate extension on March15th.

[BOB W]

I have a new client that I met with a couple of nights ago who, among other things, have an S corp that went bankrupt in April 2007. Prior to the bankruptcy they operated the S corp at what I would presume would equate out to being a loss (otherwise why would it go bankrupt). Client's basically abandoned their showroom with all the office equipment and displays for the landlord to take and sell to recover past due lease payments. Lo and behold, former partner hears about this and goes to the landlord and tells him that he is going to "take over" the operation and pays the landlord the past due lease payments. The landlord hands over the keys, the former partner cleans out the place and is not to be heard from again. My client calls the police and they tell him, "This is a civil matter", so no police report.

Here's my problem. The computer equipment had all the income and expense info on it. Therefore, it is virtually impossible to prepare a return of any sort for the business. How should I handle this.

At first blush I thought casualty loss. But, with no police report I don't think that would work. Then I thought capital loss on the value of the shares (if any real value due to prolonged losses).

I'm totally at a loss for any explanation to the client on how to proceed. Should we file a return for the S corp? How do we treat the "lost" items of inventory and equipment? What info do we use to prepare the returns.

Any help would be greatly appreciated, as I'm unable to figure out how to handle this.

Sorry to be rude, but this story doesn't make sense. This guy had walked away from all his business equipment and records in the first place and now he is crying foul by his partner??????

I personally would walk away from him. He probably doesn't have money to pay you for the horror show anyway............

[JoshinNC]

Hadn't thought about duplicate bank statements

That's the perfect starting point. I guess I was just being stupid.

Bob, the story didn't make sense to me either. He does have the money to pay me, as he is now gainfully employed doing the same type of business, but as an employee (less headaches for him).