Seaside CPA wrote:Sounds like S Corp #1 is fairly small with not a lot on the books. I would be tempted to just close it and continue with everything being done through other S corporation.
. 336, not 311.If you shut down corp #1, the goodwill is taxable. 311(b) gain triggered on liquidation, picked up by shareholder. You don't want to put yourself in that position.
. I'm guessing small $ involved here.Can you provide some specific guidance on the process? S Corp #1 has cash, a bit of A/R, some goodwill, a couple of old pressure washers (window cleaning business) a very small loan from shareholder on the balance sheet 12/31/19.
. Needs to be used? Says who? Follow reg. 1.368-3.Another CPA gave me a copy of a corporate reorganization statement filed by corporation that needs to be used.
. It really isn't.Seems like it shouldn't be too complicated, ...
. I meant to comment on this. I'm not sure you can do this "as of", especially if it's a statutory merger that has not yet happened. Now a stock-for-assets, (C reorg), maybe. Or a 351 followed by a 332.Since the two are combined as of 1-1-20, do I do a final return for SCorp #1 and zero out their balance sheet?
. They won't give you hours, they might give you erroneous answers.I could spend hours on the phone with IRS reps that could give me inconsistent guidance,
. Probably been done that way before, but not under the law. And how will you answer when IRS asks what happened?In the end, it would probably be much more simple, and save on tax/accounting fees.
. Excellent advice, and certainly not wrong, but also might bankrupt the client when bill arrives.My specific advice is either to thoroughly read through BNA Portfolio 771-4th: Corporate Acquisitions — (A), (B), and (C) Reorganizations, Ginsberg & Levin, Mergers Acquisitions and Buyouts, [Ch. 6 Basic Principles of Tax-Free Reorganizations, Ch. 11 Special Considerations in Taxable and Tax-Free Acquisitions Involving S Corporation] or dump it.
. Or any decent lawyer who knows how to read reg. 1.368-1.I might have the merger agreement reviewed by tax counsel.
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