jlray Posted January 31, 2010 Report Share Posted January 31, 2010 I have a S-corp client that has closed their business during 2009. They sold all remaining inventory and business assets. Therefore, all that was left on the books at year-end was approximately $100 in the bank account and all the credit card debts. There are no secured debts. I started working on the "final" tax return when the client informed me that she had filed bankruptcy personally as well as for the corporation. Since all business activities have ceased, can I file a final tax return for 2009? Or will the corp have to keep filing tax returns until the bankruptcy is discharged? Also-the corp has a substantial loss for the year; does the bankruptcy affect the ability to deduct the loss on her personal return? Sorry for such a basic question--this is my first client to file bankruptcy...unfortunately I believe others aren't far from filing as well. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted January 31, 2010 Report Share Posted January 31, 2010 I would not file a final return this year because there maybe some unforseen business that could evolve. In my opinion, this should be the year for the S-Corp to "wind up" business. The bankruptcy is in the hands of a trustee for both the S-Corp and her personally and you might not have all the information about the proceedings. Can you be sure there are no assets in the hands of the trustee? The fact that the S-Corp will have a significant loss will only affect her personally and is still deductible per the IRS rules. If she gets a refund because of the loss, then the trustee will take that as well to settle any debts. It will be interesting to see others responses Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.