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Not sure I see how there would be income & expense recorded in regard to the "disposition". I am preparing the 1120S, which I have done many of, but not in regard to corporate dissolution. Thank you.
Your reply is excellent....just one more fact to the situation. The sole shareholder is going to resume the exact same business, but in the form of a sole proprietorship. What is the gain or loss on assets in that situation - the book value versus fair market value at the date of the dissolution? What about debt? Does that enter into the overall gain or loss? There are payroll liabilities that have not been paid. I will gladly reward your reply with an appropriate tip as I understand this goes beyond a standard question.
sorry for the delay in my reply. What if the assets are not sold, but used in the same business, but as a sole proprietorship? I asked this previously but I think it did not register somehow. In other words, the 100% shareholder dissolves his S corp; but then resumes the same activities under a sole proprietorship. No sale really. Is the gain or loss calculated on the FMV of the asset vs the book value? Is there a gain or loss to be calculated in that circumstance or do the "transferred" assets just have a zero basis to the sole proprietorship?
OK, but is the gain or loss calculated as the difference between the FMV and the book value at the date of the dissolution ?
So, if there is zero basis in the S Corp stock; ;then if there is any FMV to the remaining assets, it would all be gain? Thank you for following up on this. Happy to make this a new query if you want because I will gladly send another tip your way.