Thanks for all your responses!
Michael ….I do believe the best thing is to amended the 2011 return as a final. Fortunately, in the State of Florida he is not required to file a return for a 1120s the only responsibility is to file an annual report with the state and file payroll returns if applicable.
Joan & Terry…. I did check with the State of Florida and his Corporation was administratively dissolved as of 09/23/2011 for failure to file his annual report. The only assets the S-Corp has had since incorporation is $100 loans to shareholder and $3,000 of fixed assets fully depreciated (originally under section 179), the offset liability is capital stock of $100. The Corp has never had a bank account, issued 1099s, or filed payroll returns under the EIN. All profits each year have been distributed to the single shareholder, hence zero retained earnings.
At this point, I think the best solution is to:
Amend the 2011 1120s as final.
Amend the husband’s 2012 1040 as MFS.
File the 2013 1040 as MFJ with Schedule C .
I am preparing a detailed letter of engagement of the above services I will provide. I will be very clear that it was the failure of the shareholder to inform me the 2011 1120s return was a final. In addition, the letter will be clear the only amendment I will be making to the husband’s 2012 1040 is the filing status from single to MFS and that I will not review or verify any information reported by the prior accountant.