Dissolving S-Corp - taxation on remaining assets

[dkh]

I have a client waiting on K-1 for S-Corp that's final year was 2019.  My client (husband and wife) are the only shareholders left in what once was a family owned business.  The tax firm (which has had this S-Corp since clients parents formed it) preparing return says they must pay tax on the difference of current FMV of land and original cost shown in S-Corp.   I've not had experience with dissolving a corporation but I don't think this is accurate.  Why wouldn't the land just have a deed transfer from corporation to the shareholder?    Sorry I don't have lots of details that may be needed.  Any help will be appreciated.

[IRonMaN · Accepted solution]

The S corp guys are right, you have to treat the land as if it had been sold - you can't distribute out assets at book value if the FMV is higher.

[rbynaker]

This is the #1 reason why you don't put appreciable property into an S Corp.  At least now they'll know for next time. 🙂

[dkh]

Oh lordy.    Thank you @IRonMaN .  I'll pass that information on to my client along with a box of tissues.

[dkh]

Guess the attorney that helped clients father setup this farm S-Corp didn't convey that or the father thought - not my problem I'll be dead when it's dissolved. 

[IRonMaN]

You betcha!

[dkh]

New question - dissolution of S-corp has been filed with state, can that be revoked?

EDIT:   I withdraw this question.  I know it's not tax preparation related.  And since the S-Corp that this is relative to isn't even my client I'll take the position - Not my problem.  😁

[sjrcpa]

That's a legal question. Check with the attorney. My guess is No.

[dkh]

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@dkh wrote:

New question - dissolution of S-corp has been filed with state, can that be revoked?

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I withdraw this question.  I know it's not tax preparation related.  And since the S-Corp that this is relative to isn't even my client I'll take the position - Not my problem.  😁        Thanks everyone for the help.

[qbteachmt]

"Not my problem."

But apparently, your clients' problem, so it is nice to see you care enough to try and find out issues that impact them. You get an "atta-boy/girl"!

[dkh]

Girl, thank you.    Yeah, I do care.  They're good people that haven't been advised well.   Client is already on the war path to his attorney.