How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Megan C Your Own Question
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Type Your Tax Question Here...
Megan C is online now
A new question is answered every 9 seconds

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

Customer Question

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
Expert:  Megan C replied 1 year ago.

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.

Expert:  Megan C replied 1 year ago.


Customer: 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
Expert:  Megan C 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.

Customer: 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.
Expert:  Megan C replied 1 year ago.

Yes, you should be fine.

Customer: replied 1 year ago.
Okay. Thank you.