S-Corp Dissolution

Forum|Forum|3 years ago
March 1, 2023
30 replies
120 views

Client sold a grocery business operated under S-Corp. on 11/30/22 for $10,000.

Their balance sheet on the last day: cash 54,414, inventory 19,414, loans from shareholders 13,737, capital stock 40,006, retained earnings 19,736.

Please help me how to process transactions in ProSeries professional to dissolve the S-corp and realize loss of sale.

Thanks

ProSeries Professional

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dascpa

Level 11

Look at the contract of sale for the allocation of price breakdown. File Form 8594. Take some continuing ed classes on the subject. If you understand the concepts, that makes the tax return input so much easier.

dkh

Level 15

Let's start with the $10,000. What is the breakdown - inventory, ~~assets~~ equipment (which you did not mention being on the Balance Sheet ), Goodwill ?

edited

IRonMaN

Level 15

Pesonally I've been looking for a sweetheart deal like that. Buy 54,414 of cash for only $10,000 and have them throw some inventory in for good measure. Heck of a deal. Now if the inventory was all Dove chocolate this would be a grand slam 😀

Slava Ukraini!

qbteachmt

Level 15

Agree. But how do i record that transaction in ProSeries to realize the loss on sale of inventory ?

Thanks

"It should be debit to loss on sale of inventory instead debit to cost of goods sold. isn't it ?"

The point of the sale price identifying what was purchased is how you determine which things carry gain, loss, are ordinary income, etc. That's why both parties are supposed to agree to the details.

This sale of inventory is no different than if they sold all their stuff at a deep discount, because it is about to spoil. You know the business data reflects the "sold at a loss to COGS" and that's all you are doing. There is no Special Loss for this.

You should find a mentor to work with you. It's hard to tell if you are overlooking something else or treating something else incorrectly for your client.

Don't yell at us; we're volunteers

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