Have a Tax Question? Ask a Tax Expert
Cancellation of debt is taxable as income to the corporation -- and since it's an S Corp it would ultimately flow through to your return. However, if the corporation was closed now, it's insolvent and you will not owe tax on that. File an S Corp return, but file form 982 to show insolvency -- there will be no additional income to report on your personal return.
Please let me know if you need anything additional. IF not, please rate positive.
Nancy -- if the corporation has already been marked 'final' and closed - then it doesn't exist. In that case, the 1099-C will be ignored. In any rate, the corp is insolvent and there is no tax.
Yes, you should be fine.