Closing of S-Corporation

[chj63]

In closing of S-Corporation, 100% share holder, with enough basis, how to 

file final 1120 S.  Do need to concern about recapture of past depreciation expense?

How do you close balance sheet accounts information?  Thank you very much in 

advance  

[sjrcpa]

What happened to all the amounts on the balance sheet?

[chj63]

Thank you for your comment.

What I am considering now is:

Zero out balance sheet amount and distribute the amount through Schedule K.

S-Corporation would be completely closed.

The shareholder would report the amount to the shareholder's 1040 based on Schedule K-1.  

Thank you very much in advance for your time and consideration.

[sjrcpa]

Again- what happened to the assets on the balance sheet (cash, equipment, accounts receivable)?

What happened to the liabilities on the balance sheet?

Were they sold? Distributed to the shareholders?

[chj63 · Accepted solution]

Dear sjrcpa,

Thank you again for your thoughtful comments.

The S-Corp. has been operating on custom order business, as a result there no receivable.   At the closing of year end, there is no payable.

The business has been operating on loss recent years, and shareholder has been using his own personal funds (as additional paid in capital) to keep his business operating.

Regarding fixed assets, only small amount remain yet to be depreciated.

Cash are not yet distributed to the shareholder.  There is enough stock basis due to additional paid in capital, cash would be distributed to the shareholder without tax consequence. 

My concern is how to finalize Form 1120-S in year 2019.  Or do I need to go over to year 2020 for the distribution.  Operation of business has been ended as of 12/31/2019.    

Thank you for your time and consideration.

[RollTide68]

1120-S p1-2 line H check box 1 Final return