Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

My Name is ***** ***** Stevenson CPA, and I do not know how…

Customer Question
My Name is *****...

My Name is ***** ***** Stevenson CPA, and I do not know how to handle this situation. I am preparing a final return for an S Corp, which was previously a C corp with C corp retained earnings. What are the tax consequences of closing a S corp with C corp retained earnings on the Balance Sheet?

Accountant's Assistant: Thanks. Can you give me any more details about your issue?

The C Corp elected to be an S corp 3 years ago, now they want to file a file a final return for the S Corp. What happens to the amount shown as prior C corp retained earnings?

Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 53 minutes by:
1/27/2016
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,333
Experience: Taxes, Immigration, Labor Relations
Verified

Only tax consequences is there is BIG - built-in-gain retained by the S-corporation.

In this case - distribution of assets to shareholders is treated as the sale - and built-in gain is realized on the corporate level.

Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 2 years ago

Otherwise - there is no difference. Distributions to shareholders would be treated as sale price of corporate shares (and that includes prior retained earnings from C-corporation) - so shareholders will calculate a gain or loss depending on their basis in corporate shares.

.
I appreciate if you take a moment to rate the answer.
Experts are ONLY credited when answers are rated positively.
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,333
33,333 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
This S corp is electing to move to a C corp. It has negative
This S corp is electing to move to a C corp. It has negative RE. Does it roll to C or how is it handled tax wise? … read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,435 satisfied customers
I am trying to reconcile info on an S Corp balance sheet and
I am trying to reconcile info on an S Corp balance sheet and a S Corp Tax return. The balance sheet shows larger distributions (and retained earnings) than the tax return. I'm wondering if the differe… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I am dissolving an S Corp, and all I have left on my Balance
Hi I am dissolving an S Corp, and all I have left on my Balance Sheet are: Capital Stock $145.00 Additional Paid in Capital of $35,116.00 R/E ($35,261.00) What are my options to dissolve?Thank you ver… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,435 satisfied customers
I am shutting down my s corporation. How do I handle the
Hi, I am shutting down my s corporation. How do I handle the common stock on the balance sheet? The only things left on the balance sheet are retained earnings of $9100, common stock of $1000, Distrib… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,333 satisfied customers
PLEASE ONLY ANSWER IF YOU A CONFIDENT IN TAXES AND THE
PLEASE ONLY ANSWER IF YOU A CONFIDENT IN TAXES AND THE ANSWER: I am a CPA (not a tax expert or closure expert – I can do a simple 1120) – helping out a family's small business that is no longer operat… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,328 satisfied customers
LLC being treated as an “S” Corp purposes. The Net Profits
For an LLC being treated as an “S” Corp for tax purposes. The Net Profits for prior years should be shown as what on the Balance Sheet? Am I coorect int thinking that those Net Profits that are not pa… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
What happens to positive AAA account when sub s is dissolved
What happens to positive AAA account when sub s is dissolved that had only one shareholder?… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
i have an s corp, that was previously a c corp. the corp has
i have an s corp, that was previously a c corp. the corp has an intercompany payable to a commonly owned llc. The s-corp balance sheet is the payable, AAA and Shareholder's undistributed taxable incom… read more
BK-CPA
BK-CPA
Bachelor's Degree
687 satisfied customers
I'm doing an 1120S two member LLC. Prior to making the
I'm doing an 1120S for a two member LLC. Prior to making the S election in 2014, the client was a single member LLC that filed schedule C. Not sure how to handle opening retained earnings on the 1120s… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Our company, treated as S-corp for tax purposes for many years,
Our company, treated as S-corp for tax purposes for many years, reverted to C-Corp (termination effective 10/8/13), and now must file 2 short year tax returns for 2013 . On 10/7/13, our balance sheet,… read more
taxmanrog
taxmanrog
Master\u0027s Degree
1,055 satisfied customers
I am preparing the final tax return for an S-Corp that converted
I am preparing the final tax return for an S-Corp that converted to a C-Corp mid year. The Liabilities and equity section of the final S-Corp return shows negative retained earnings, positive addition… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
S Corp bought land, build property and faced foreclosure.
S Corp bought land, build property and faced foreclosure. Total cost was 2.6 mln. On foreclosure we have the following: Bank amount due $2.3 mln, Interest 45k, Publication costs 575.00 Attorney Fees 1… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I am trying to dissolve an s-corp with 1 shareholder that has
I am trying to dissolve an s-corp with 1 shareholder that has not been in business for years. There are no assets and accounts payable and a loan from the shareholder are to be written off. Retained e… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
My client sold his business as follows: Owner agreed to
My client sold his business as follows: Owner agreed to sell all corporate assets (not stock) in his 100%-owned S Corp (ABC Corp) as well as any goodwill he has personally created to Company XYZ for t… read more
William Ellis, CPA
William Ellis, CPA
Master's Degree
236 satisfied customers
I have an S Corp that was a C Corp prior to 2010. Trying to
I have an S Corp that was a C Corp prior to 2010. Trying to figure out what should be zeroed out and what accounts should have balances in QuickBooks as my Tax Accountant do not complete the end of ye… read more
RD
RD
Self Employed
Master's Degree
1,164 satisfied customers
Hello Charles, I asked a question re dissolution of S Corp
Hello Charles, I asked a question re: dissolution of S Corp on Sept 30,2010. I filed for the dissolution and the S-Corp was dissolved in 2010. I am now filing the final tax return, and my question is,… read more
Charles Greiner
Charles Greiner
Owner
Bachelor's Degree
2,436 satisfied customers
i have a professional corp currently a subS corp. it has operated
i have a professional corp currently a subS corp. it has operated for 20+ yrs but in recent years there has been little or no activity and i wish to close it. however, the last accountant said there m… read more
RLWEA
RLWEA
Enrolled Agent
Bachelor
69 satisfied customers
On a final 1120-S tax return, the Retained Earnings and Line
On a final 1120-S tax return, the Retained Earnings and Line 8 of Schedule M-2 show nwgative balances of 30,000. There is an asset distribution to the shareholder of $25,000. The distribution was reco… read more
BK-CPA
BK-CPA
Bachelor's Degree
687 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x