Has she taken any of her personal monies and put them into her business? If she has done this, then she has given the corporation a loan and she can pay these monies back to herself with interest.
On the other hand, if this isn't the situation, then she will be responsible for paying all taxes that are due on any of the monies that she pays herself from the corporation.
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Yes, you are correct. She would be better off to file a dissolution on the C Corporation and form an LLC. The laws for the two are very different. She could also file for an S Corporation but an LLC would give her the same advantages of an S Corporation without the responsibility of keeping minutes.
I apologize, I thought that you said that she had become a C Corporation. If she is S status she will be alright. On the other hand though if she were to disolve this and file as an LLC she would not have to keep minutes from meetings, etc.
Hope this help! Sorry for the confusion...My mind was the foggy one