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We dissolved an Illinois C-corporation in April 2016 and…

We dissolved an Illinois...

We dissolved an Illinois C-corporation in April 2016 and filed a final US IRS-1120 tax return for tax year 2016. The corporation left around $200,000.00 of net operating loss carry-forwards on the table at dissolution. We are now about to receive a payment to the corporation of $30,000.00 on a renegotiated license agreement that was supposed to have expired, but the other party wishes to extend. Under Illinois corporation law, the corporation has a five-year window to wind up business, which is still in effect. Can we file a new IRS-1120 (after the "final" one which we already filed) and still claim the NOL to offset the income that we are due to receive in 2018?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

No, that's all. Thanks.

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Answered in 22 hours by:
3/22/2018
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,086
Experience: 35 years tax experience, including four years at a Big 4 firm.
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There's a problem with your analysis. Even if you receive the income from the corporation, and use your existing NOL, you still have to get it out to the shareholders. And that will change your gain or loss on liquidation of a few years ago, meaning you will still have to pay income tax on the income you receive from the corporation. And you will have to file tax returns for the rest of 2016, 2017 and 2018, and pay for that plus any state franchise fees.

When companies liquidate, the shareholders step into the shoes of the corporation in liquidation, including claims that no one may have considered years ago. Best thing to do is claim the income personally, and treat it as capital gain income from dissolution in 2018.

Thanks for asking at Just Answer. Positive feedback is appreciated, five stars is best. I'm PDtax.

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Customer reply replied 3 months ago
what is the answer to my question?
Customer reply replied 3 months ago
On what line on Schedule D would I report this capital gain?

long term capital gain, form 8949, code F (no basis reported to IRS). Then bring that forward to Schedule D.

This can be used to offset any capital loss carryforward you may have from the business shut down in 2016. You may have no tax to pay on your share of the $30,000 this way.

PDtax

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Hi again. PDtax here.

Do you need anything further? If your question has been addressed, please rate my response to close out your request.

PDtax

PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,086
Experience: 35 years tax experience, including four years at a Big 4 firm.
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