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rakhi.v, Tax Attorney
Category: Tax
Satisfied Customers: 4545
Experience:  Have graduated in Law with specialization & emphasis in Financial Laws and has working experience of over a decade.
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New client - has a c-corp that he is going to close. It has

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New client - has a c-corp that he is going to close. It has large NOL and prior CPA has booked a lot of PIC. he is going to sell the assets but will still have NOL. Two questions, can he withdraw money as return as his additional paid in capital without tax consequences? Can he claim loss on his personal return for worthless stock? he is the only stockholder
Submitted: 2 years ago.
Category: Tax
Expert:  rakhi.v replied 2 years ago.
Dear Friend, Hello and welcome. Thank you for providing an opportunity to assist you. Let me come straight to the point to keep this simple. First, NO, he cannot withdraw his money as return as his additional paid in capital. Further, HE CAN claim loss on this personal return for a worthless stock, but he will have some limitations. Let me explain this in detail. Let us suppose, he decides to claim loss on his personal holding of worthless stocks. IF he does that, he would ONLY BE ALBE TO OFFSET against any CAPITAL GAIN and not otherwise. Your worthless stock losses, either short-term or long-term, can offset capital gains dollar for dollar. If you have more in capital losses than gains, then your loss can offset ordinary income up to $3,000. Additional losses can be carried forward to future tax years. In my opinion, One possible way to reduce taxes is to convert the C corporation to an S corporation before liquidating, so that the shareholders can claim the losses on their individual tax returns. The dissolution of the corporation must be reported to both federal and state tax authorities.I am sure this would help. I wish you good luck.You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.Warm Regards,