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I received 2 1099 C business that closed 3 years ago. The

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I received 2 1099 C...
I received 2 1099 C for a business that closed 3 years ago. The business was an S-corporation. it was sold but at the time there was about $25,000 on a credit card (in the business name). The debt was settled but now I have the 1099 C's and am not sure what to do with them. Do I have to report this on my personal tax return even if they are not in my personal name?
Submitted: 1 year ago.Category: Tax
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3/20/2016
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 1 year ago
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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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.

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Tax Professional: Megan C, Certified Public Accountant (CPA) replied 1 year ago

Thanks!

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Customer reply replied 1 year ago
I am not sure I understand - we should file an s-corporation return even though the corporation was marked final year several years ago? So file it as if it was active and mark it final year again?
Then attach a form 982 - since the company has no income or expenses (other than cancelled debt) and no assets, it is insolvent. Is that correct?Nancy
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 1 year ago

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.

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Customer reply replied 1 year ago
Okay. Since there were other shareholders involved back when it was active and it was sold, I just don't want anything coming back to haunt us. If you are sure we do not need to do anything to address this, then I will assume we are okay to just ignore it.Thank you.
Nancy
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 1 year ago

Yes, you should be fine.

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Customer reply replied 1 year ago
Okay. Thank you.
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Megan C
Megan C
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