How do I dissolve an s corporation?

[Scott Nicely]

I have an s corporation with my wife. We are interested in dissolving the s
corporation and going back to a sole proprietorship as part of our
relocation to another state.

The s corp hasn't turned a profit this year and has under $2000 in assets
right now. I would like to dissolve the corporation this month. Are there
any tax ramifications, etc. that I need to know about? I assume I need to
obtain the fair value for the assets and somehow transfer those assets to
the sole proprietorship.

Thanks!
Scott Nicely
sni...@nicelygroup.com

[THealyCPA1]

<<I would like to dissolve the corporation this month. Are there
any tax ramifications, etc. that I need to know about? I assume I need to
obtain the fair value for the assets and somehow transfer those assets to
the sole proprietorship.>>

You are correct. The corporation recognizes gain/loss, which flows through
to you on your K-1. Then, if you have any remaining basis in your stock,
you would have a capital loss to report on Schedule D. The proprietorship
takes the fair market value of the assets as its basis for figuring
depreciation, gain, or loss.

An alternative is to incorporate in the new state, do a Type F
reorganization (essentially merging the two corporations with the
corporation in the new state being the survivor) and dissolving the old
corporation. From a federal tax perspective the corporation continues on
as if nothing had changed.

Tom

--Solving your tax and business problems with
Professional Service...Personal Attention
Email: THea...@aol.com
Web: http://members.aol.com/thealycpa/Tom_Healy_CPA.html

[Dana Persells]

Lawyer hat. There are some issues in dissolving a corp that should be
reviewed by your local lawyer.
I would check out the tax issues also though my experience is that
they are usually not difficult. You'll have to file all the reports and
mark them final. The end is a transfer of all remaining assets after all
liabilities are cleared to the shareholders. Luck,
Dana

[Robert M. Pritchett]

Why do you want to dissolve it? It's given you a corporate shield and
passthru of losses. Too much paperwork? Understandable.

Contact your state of incorporation for the requirements; you'll probably
need to get an acknowledgement that you're in good standing (all taxes/fees
paid up etc.) before they let you file your dissolution. Check with a CPA
and lawyer to make sure you haven't missed anything.

Rather than go the sole proprietor route, you might want to work through an
umbrella or small group consulting practice. This can give you most of the
benefits and tax deductions of being an Independent Contractor without
having to actually set up and run your own business. It may also be able to
get you into clients who won't do business with one-person or couple-owned
or unincorporated businesses. See http://pobox.com/~rmpcp/umbrellas.html
for more info on this approach. And good luck.

Robert M. Pritchett, President - RMP Consulting Partners LLC
http://pobox.com/~rmpcp - rm...@pobox.com - Dallas, TX
"Quality means doing it right the first time!"
Contractors: tired of hearing "W-2 only"? Join us and let us help you get
that same contract on a 1099 as a self-employed independent contractor!

Scott Nicely wrote in message <74r514$r...@navajo.gate.net>...

>I have an s corporation with my wife. We are interested in dissolving the
s
>corporation and going back to a sole proprietorship as part of our
>relocation to another state.
>
>The s corp hasn't turned a profit this year and has under $2000 in assets

>right now. I would like to dissolve the corporation this month. Are