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An S-Corp is a designation spedifically established for certain tax benefits, rates, etc. Thus, if you didn't file the correct IRS tax form, you're not going to be able to change the past taxes you've paid or been assessed. However, you can proceed in the future as an s-corp.
She told us we could take money from the business; for instance, we bought a piece of property - $46,000 with the business money. Then 3 years later we sold it. The paperwork was all done in our personal name and not in our business name when it was purchased and sold. She told us we could take the money - and put in our personal savings. Now from what I understand we have to pay back everything we took or pay a dividend. Is that correct? Also we have been paying for our house out of the business this past 9 years. The house was never in the businesses name but we paid it out of the account. She knew this and never said anything. We didn't show it as salary nor did she take it out as an expense on our taxes. What now???
These are questions better suited for a CPA than an attorney. However, I will say that if you took money out of the business, you will have to pay personal taxes on the payments received. The same would pertain to the house payments. If the business was paying the bills, you should have counted this as income on your personal taxes.
If you close the corporation, you can divide the assets and pay the members of the company. The receipents would have to pay taxes on that income.
The corporation would just show that as paying out the assets before dissolution.
If you dissolve the corporation, it will stop any tax liability it has going forward, but it won't change your personal obligations to pay taxes on the dividends from the company.