1120 corp

[TAX]

client clsed business on March 31, 2007.

He dissolved corpoartion.

Cash he got was used to pay bills.

He had $25,000 in assets as of 03/31/07.

How should I approach?

Is there a diff between dissolution and liquidation?

He did not sell some assets as these assets had no value (Computers etc).

Do I fill out form 966 (Disolution form)

Thank you!

[Uncle Sam]

client clsed business on March 31, 2007.

He dissolved corpoartion.

Cash he got was used to pay bills.

He had $25,000 in assets as of 03/31/07.

How should I approach?

Is there a diff between dissolution and liquidation?

He did not sell some assets as these assets had no value (Computers etc).

Do I fill out form 966 (Disolution form)

Thank you!

Yes - Form 966 is supposed to be filed. I suggest you also determine what state requirements there are -as the state granted the charter and has the authority to revoke it. The corporation isn't officially closed until the State closes it, not IRS.

Whatever is remaining after all assets have been sold, debts have been paid off, gets reported as a liquidating dividend on 1099-DIV. This gets reported on shareholder's Schedule D as a long term transaction (assuming the corporate stock was held more than 1 year). Cost basis is his initial cost initiating the corporation + whatever book value the remaining assets had.

[TAX]

2007 final return - 1120

Further, this client, c copr, has a -ve retained earnings on page 4 of 1120 balance sheet?

Should I just leave it there or enter offseting amount on adj to Equity line (#26) on Sch "L"


Thanks!