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The problem is that you can't have activity from a period prior to a new corporation being formed put into that corporation
So, if you received a check on May 30, and opened your new C Corp on June 1, you couldn't allocate that May 30 check to the new corp
Does that make sense?
So, once you open up the new corporation, then you can start fresh but not until then
You will have to have the activity allocated to the old corporation unless the new corporation was already open and functioning at that point
That is what I had figured....So, I if I want to have a fresh start, I'd need to move the shareholders over to the new corp...allocate what they contributed in the "old" corp as part of the new corp and close the old corp in 2013?
We haven't had any income yet. All money has been either capital contribution for shares or loans.
Yes, that's what you would have to do
I could adjust that to the new corp and close out the old one, then?
Yes, you could
And as long I as I keep the share percentages the same, it should be pretty much a equal transition to the new corp.
That is correct
My question there would be, if they contributed in 2012 to the old corp, but I allocate that contribution to the new corp (even though the money was given in 2012) it is the same difference in terms of capital contribution---so long as they are not short term holders?
yes, that is correct
ok. So I'll file the taxes for 2011, 12 and 13 with 13 checked as the last return for the old corp. I know I'm late! Nevertheless, if they contributed funds as shareholders or as notes, that is not considered income for any of these years, correct?
That's my last question on this
That is correct - contributions and loans are not taxable income to the corporation
ok...sorry one more, if there was 5k left in the bank (from this contribution or loan) is that considered an asset at the end of the year? Or if it was a loan, is that an asset because there was 5k in the account at the end of the year?
now i'm done....
Okay - if it was loan you would have a $5,000 asset and a $5,000 liability
I see. Ok. Thank you!