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Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 53954
Experience:  32 years of experience practicing law and a businessman.
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Hell Richard,I had started to chat with you in a previous session, but I was unable to ask you the following before having to place the deposit… I wanted to ask you if you have sufficient knowledge of Business Practice and Business Law, specifically regarding S-Corps. in the state of Nevada?My name is ***** ***** Bellamy. I am the sole director/shareholder to an S-Corporation based in Nevada. I am planning on dissolving the corporation, and I was informed by the NV Sec. Of State Office that I did not need to renew my NV State Business Lic. & file the Annual list of offices if I plan to dissolve the Corp. in 2016. I am confused on what the next step should be, and what I my corp is legally able to do while in this "Default" status. Additional Info:• My company has zero outstanding debts. • My companies Fiscal Year End is 12/31, and this is also the date my corporations Annual List of Officers & NV State Business License Renewal was due (Thus, 12/31/2015 should have been my businesses last official day of business before going into default status).Specific Questions:• What business is my corporation legally allowed to conduct while in “Default” Status?• Can the assets of an S-Corp be liquidated (Sold) when the Corporation is in “Default” Status?• My company still holds products as inventory, which if I am not mistaken is considered an asset to my business. I am wanting to continue selling this inventory, as an effort to “Liquidate the Corporations Assets.” Can this be done legally if my corporation status is in “Default”? ►If not, what is the best way to go about selling the remaining inventory? Should I (as a customer) purchase the remaining inventory from my Corporation at the current “Cost of Goods” price, and then sell it on my own as if I were selling my own personal products? I feel that doing it this way would eliminate my concerns of how to properly go about liquidating inventory while my company is in “Default” Status.• What would be the best way to distribute the remaining funds in my corporations bank account, and the money that is collected from selling (liquidating) the remaining inventory?• When does the filing of Form 966 (Corporate Dissolution or Liquidation) come into play? Does it need to be filed before any of the liquidation occurs? Should this have already been done?
JA: Thanks. Can you give me any more details about your issue?
Customer: Before I am directed to the page where I am asked to make the deposit, I wanted to ask if you have sufficient knowledge of Business Practice and Business Law, specifically regarding S-Corps. in the state of Nevada?As Stated Above, Below I have repeated my specific questions:• What business is my corporation legally allowed to conduct while in “Default” Status?• Can the assets of an S-Corp be liquidated (Sold) when the Corporation is in “Default” Status?• My company still holds products as inventory, which if I am not mistaken is considered an asset to my business. I am wanting to continue selling this inventory, as an effort to “Liquidate the Corporations Assets.” Can this be done legally if my corporation status is in “Default”? ►If not, what is the best way to go about selling the remaining inventory? Should I (as a customer) purchase the remaining inventory from my Corporation at the current “Cost of Goods” price, and then sell it on my own as if I were selling my own personal products? I feel that doing it this way would eliminate my concerns of how to properly go about liquidating inventory while my company is in “Default” Status.• What would be the best way to distribute the remaining funds in my corporations bank account, and the money that is collected from selling (liquidating) the remaining inventory?• When does the filing of Form 966 (Corporate Dissolution or Liquidation) come into play? Does it need to be filed before any of the liquidation occurs? Should this have already been done?
JA: OK got it. Last thing — Business Lawyers generally expect a deposit of about $18 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
Submitted: 10 months ago.
Category: Business Law
Customer: replied 10 months ago.
I have attached my questions in a more reader-friendly format to this reply...
Expert:  Richard replied 10 months ago.

Good morning. This is Richard and I look forward to helping you this morning.

With regard to a defaulting corporation, the following Nevada statute is applicable:

"NRS 78.175  Defaulting corporations: Duties of Secretary of State; revocation of charter and forfeiture of right to transact business; distribution of assets.

1.  The Secretary of State shall notify, by providing written notice to its registered agent, each corporation deemed in default pursuant toNRS 78.170. The written notice:

(a) Must include a statement indicating the amount of the filing fee, penalties incurred and costs remaining unpaid.

(b) At the request of the registered agent, may be provided electronically.

2.  On the first day of the first anniversary of the month following the month in which the filing was required, the charter of the corporation is revoked and its right to transact business is forfeited.

3.  The Secretary of State shall compile a complete list containing the names of all corporations whose right to transact business has been forfeited.

4.  The Secretary of State shall forthwith notify, by providing written notice to its registered agent, each corporation specified in subsection 3 of the forfeiture of its charter. The written notice:

(a) Must include a statement indicating the amount of the filing fee, penalties incurred and costs remaining unpaid.

(b) At the request of the registered agent, may be provided electronically.

5.  If the charter of a corporation is revoked and the right to transact business is forfeited as provided in subsection 2, all the property and assets of the defaulting domestic corporation must be held in trust by the directors of the corporation as for insolvent corporations, and the same proceedings may be had with respect thereto as are applicable to insolvent corporations. Any person interested may institute proceedings at any time after a forfeiture has been declared, but, if the Secretary of State reinstates the charter, the proceedings must at once be dismissed and all property restored to the officers of the corporation.

6.  Where the assets are distributed, they must be applied in the following manner:

(a) To the payment of the filing fee, penalties incurred and costs due the State;

(b) To the payment of the creditors of the corporation; and

(c) Any balance remaining, to distribution among the stockholders."

With respect to the Form 966, pursuant to the instructions as to when to file (https://www.irs.gov/pub/irs-pdf/f966.pdf):

"When To File Do not file Form 966: File Form 966 within 30 days after the resolution or plan is adopted to dissolve the corporation or liquidate any of its stock. "

Customer: replied 10 months ago.
NOTICE: I have attached a copy of this post in format which is much easier to read, follow, and understand, as an attached PDF document to this reply.Richard,
Though I do appreciate your reply, and I thank you for it, you did not answer any of my questions specifically, as this was merely a copy and paste of chapter 78 from the Nevada Revised Statue which I found and read on my own. I am hoping to receive input as to how this statute would apply to my situation and my specific questions. Can you give any input to my specific questions stated in my earlier posts, as well as those described below?As a reference, my Annual List of officers and NV State Business License Fees were due on 12/31/2015. I had not paid them, as I was instructed not to by the Nevada Sec. Of State (NV SoS) operator since I am planning on dissolving the corporation during the 2016 year. Thus, as of 1/1/2016, my corp. is listed with a “Default” Status.My main questions and concerns are regarding my remaining inventory. I want to be able to continue to sell as much of my remaining inventory as possible, and to have as much time to do it as possible, and I do not know how or when I am able to legally do this during this process? With that being said, can you please put the following items (listed as ‘a’ through ‘e’ below) in order for me (as far as which item should be done first to which should be done last) and answer my questions for each item:a) Sell Remaining Inventory
 Does the inventory have to be liquidated to myself (as the 100% shareholder) before I can attempt to continue selling it?b) File “Certificate of Dissolution” form with the NV Sec. Of State.
 The dissolution date cannot be later than 90 days after the certificate is filled. Thus, to my understanding, once I file this form, I will only have a maximum of 90 days to sell my remaining inventory, so I believe I should technically delay the filing of this form until 10/1/2016, and mark the date of dissolution to be 12/31/2016. This will give me the max amount of time to sell my inventory, provided I can legally do so before this form is filed, CORRECT?c) Develop the “Resolution or Plan to Dissolve the Corporation or Liquidate Any of its Stock.”
 This document is required to be filed with form F966 as an attachment when submitted to the IRS.d) File Form F966 “Corporate Dissolution or Liquidation.”
 This form says it must be filed within 30 days after the resolution plan is adopted to dissolve the corporation or liquidate any of its stock.
i. Would the date the resolution plan is adopted HAVE to be 12/31/2015, as that is when my Corporation went into Default” Status? If so, I am already past the due date, as it would have had to been mailed out today (2/1/2016)?
ii. Or, can the resolution plan be adopted anytime within the 2016 calendar year?
iii. Am I able to legally sell inventory under the terms of “Winding-Up Business Activities” BEFORE the date of which the plan for dissolution is adopted?e) Liquidate any remaining inventory assets and money leftover in my bank account by distributing the items to myself (the sole Sole Director/Shareholder).
i. Is this the point where I would “trade” ALL 100% of my companies stock for the remaining items in inventory which I have not yet sold, any additional assets, and the money leftover in my bank accounts?
ii. What form would this transaction be recorded on for tax purposes?
iii. Would I be able to legally sell the inventory items I personally received from the corporation as a “distribution of assets” during the liquidation of my corporation as my own personal items to friends, family, or on websites like e-bay?
iv. If this is legal, can these types of personal item sales continue after the dissolution date of my corporation, or would these types of sales have to stop after the dissolution date as well?In regards ***** ***** NRS Statues defined in Chapter 78, can you please answer the following questions:
1. The Statue States in NRS 78.175.2 “On the first day of the first anniversary of the month following the month in which the filing was required, the charter of the corporation is revoked and its right to transact business is forfeited.”
a. This is stating that the right to conduct business will be forfeited on January 1st, 2017 in my Corporation’s case. Does that mean that my corporation can still legally conduct business up until that point?2. The Statue States in NRS 78.175.6 “Where the assets are distributed, they must be applied in the following manner: a) to the payment of the filing fee, penalties incurred and costs due the State.”
a. Does this mean that if any assets are distributed at all, that the Sec. of State for Filing Fee must 1st be paid (as in the fee to file my annual list of officers)? I don’t understand if I am to be dissolving my corporation in 2016 why the annual list of officers fees must be paid? Can you please clear this up for me?Thank you very much for your time and help,
-Cam
Expert:  Richard replied 10 months ago.

Thanks for following up. I'm going to be involved in other projects today that will prevent me from doing the research necessary to address these questions for you timely. Therefore, I am going to opt out to open your question up to all experts so another expert can hopefully timely provide you the information you seek. Please do not respond to this post as it will only slow the process of such an expert picking up your question. Take care.

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