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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28896
Experience:  Taxes, Immigration, Labor Relations
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I am closing down a closely held C Corp. The corp has a

Customer Question

I am closing down a closely held C Corp. The corp has a large NOL and negative net worth. It owes the only shareholder over $950,000 after liquidating all assets. How is this loss for the shareholder reported to the IRS?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

The NOL will not be passed to shareholder... it will be completely lost...
If the shareholder provided a loan to the corporation - it woudl be very common to convert that loan into capital contribution - in this case it will be added to the stock basis - and when the corporation is dissolved - the shareholder would recognize a capital loss on liquidation.
I feel that woudl be the most you may do.