S-CORP WITHDRAWN FROM CA , MOVED TO VA

Forum|Forum|5 months ago
January 9, 2026
2 replies
0 views

Hi everyone,

S-corporation was formed on 01/03/2022 in California and operated there until 01/29/2025, when it moved to Virginia.

From 01/01/2025 to 01/29/2025, the company had $1,500 of income and $3,500 of expenses. As in prior years, the company also has depreciation on three assets. The date in service for three assets is for 2023 and they ( office improvement - furniture and an equipment) all of them remained in CA.

The S-corporation has only one shareholder, who was a Virginia resident as of 01/01/2025. On 01/29/2025, the shareholder formed the S-corporation in Virginia, and on the same day terminated/withdrew the S-corporation from California.

I understand that I should file one federal return and two state returns (California and Virginia). I need help understanding how to correctly file the federal, California, and Virginia returns, making sure that California income is limited to the 29-day period. The numbers in CA return are different the Federal return!! Also, what should I do for depreciation assets, and how about the K-1s?

Can someone explain the correct approach?

ProSeries Professional

sjrcpa

Level 15

Unlike individuals, you don't cut off income and expenses when a corporation reincorporates and operates in another state.

You apportion the net income. Look at the apportionment schedules for the CA and VA returns. Most states are using sales factor apportionment only, but some still use sales, property and payroll. VA uses all 3.

The more I know the more I don’t know.

HOPE2Author

Level 7

Thanks Look at the apportionment schedules for the CA and VA returns, where can I find them?

BobKamman

Level 15

Your question assumes there is just one company but then states that there are two. I would file a final California return for Company 1, through date of dissolution. And, an initial Virginia return for Company 2, starting from its date of incorporation. You might also have to file a Company 2 return with California, if it continues doing business in that state. And, a Company 1 return with Virginia, if it was already doing business there.

The shareholder, of course, will receive Schedules K-1 from both companies. Either of them may show income from both states.

sjrcpa

Level 15

good points @BobKamman

I was assuming this was an F Reorg, which it probably is.

IRC 368(a)(1)(F) a mere change in identity, form, or place of organization of one corporation, however effected;

The more I know the more I don’t know.

BobKamman

Level 15

That may be what they were trying to do, but why leave the assets behind in California? Not apparent whether they are even still in business use.

Did they get a new EIN?

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