On dissolution, you report on Report the gain or loss on Form 4797 with the corporation's tax return
See this: http://www.irs.gov/instructions/i4797/ch01.html#d0e30
A dissolving S corporation is required to file form 966 with the IRS
within 30 days of adopting a corporate resolution to dissolve and liquidate the S corporation.
Form 966 requires identifying information about the dissolving S corporation including name, address and incorporation date. Further, file the final income tax return on form 1120S for the S corporation within 3 months after the dissolution date.
The IRS requires the S corporation to file the final return by the 15th of the third month after dissolution.
Regarding the reporting
For fixed assets there is a capital gain
for the corporation on the difference between the sale price and book value of assets.Depreciation
should be calculated up to the sale date. Hence, depreciation calculated for days in the year of sale that assets are owned by the S corporation is deductible
on the final corporate tax return
Again, report the gain or loss on Form 4797 with the corporation's tax return. The basis and sale proceeds of each asset sold must be separately tracked for reporting in the appropriate section of Form 4797
Now, as sale of a whole group of assets that comprise an entire business may require the seller and buyer to specify an amount directly allocated to the sold assets. This amount is reportable to the IRS on Form 8594, Asset Acquisition Statement.
For liquidation of Cash:
What you're really doing here is repurchasing stock from the shareholders; The corporation liquidates its final asset---cash---by paying shareholders to repurchase their shares of stock.
No tax deduction
is allowed for any expense incurred by a corporation in connection with re-acquisition of stock. Also, any costs to complete the liquidation affect the gain or loss of the shareholders on their stock ... and are not, as I mentioned above, deducted as expenses on the corporation's tax return.
Shareholders report their gain or loss from owning the stock on Form 4797 on their INDIVIDUAL tax returns
. If a corporation has made a special election under Section 1244, (they can make this any time up to the time of liquidation), they can deduct losses on their stock of up to $50,000 in that tax year.