1009C to defunct Corp

[cientax]

Bank issued 1099C to a corp that is no longer in buisness. One of the shareholders received it in the name of the corp with the corps EIN on the 1099. The shareholder that received the 1099C in the mail was the sole shareholder on the account. This was a credit card account or line of credit account. The shareholder does not know if this was a C-Corp or S-Corp. All he knows is that he received a W-2 each year while in business. His son was also a shareholder. I had him ask his son if the company was C or S but the man said he didn't understand what his son said. He is unable to proudce a Corp tax return because he was not liable for filing the return. A third or fourth shareholder was the responible person for filing.

The corp went out of business a few years ago but the account was still active because they were behind on the payments untill the shareholder made an offer with the bank last august on the account and paid 50% of the account balance in cash and the 50% remainder was cancelled.

What is the shareholder to do? Eat this for lunch....

[BulldogTom]

A couple of thoughts.

First is the client is playing stupid. He negotiated with the bank to pay 50% and had the other 50% cancelled, but he does not know what the corp was or where the other shareholders are or who was responsible for filing the return? Seriously? How did he do that without the other shareholders approval? Where is the BOD minutes that allowed him to negotiate on behalf of the corp?

Second, there is probably a 1099C coming with his ssn. Why would he agree to pay 50% of the debt if he was not on the hook for it personally? Sounds like there was a personal guarantee out there and he was going to get collected on by the bank.

This is a mess and it is going to get worse until you get the corporate documents and shareholder list. I wouldn't touch, at least until I understood all the players and all the ramifications. And until I had a big retainer.

Tom

Hollister, CA