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I have a client waiting on K-1 for S-Corp that's final year was 2019. My client (husband and wife) are the only shareholders left in what once was a family owned business. The tax firm (which has had this S-Corp since clients parents formed it) preparing return says they must pay tax on the difference of current FMV of land and original cost shown in S-Corp. I've not had experience with dissolving a corporation but I don't think this is accurate. Why wouldn't the land just have a deed transfer from corporation to the shareholder? Sorry I don't have lots of details that may be needed. Any help will be appreciated.
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The S corp guys are right, you have to treat the land as if it had been sold - you can't distribute out assets at book value if the FMV is higher.
Slava Ukraini!
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This is the #1 reason why you don't put appreciable property into an S Corp. At least now they'll know for next time. 🙂
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Guess the attorney that helped clients father setup this farm S-Corp didn't convey that or the father thought - not my problem I'll be dead when it's dissolved.
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You betcha!
Slava Ukraini!
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New question - dissolution of S-corp has been filed with state, can that be revoked?
EDIT: I withdraw this question. I know it's not tax preparation related. And since the S-Corp that this is relative to isn't even my client I'll take the position - Not my problem. 😁
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That's a legal question. Check with the attorney. My guess is No.
Ex-AllStar
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@dkh wrote:New question - dissolution of S-corp has been filed with state, can that be revoked?
I withdraw this question. I know it's not tax preparation related. And since the S-Corp that this is relative to isn't even my client I'll take the position - Not my problem. 😁 Thanks everyone for the help.
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"Not my problem."
But apparently, your clients' problem, so it is nice to see you care enough to try and find out issues that impact them. You get an "atta-boy/girl"!
"Level Up" is a gaming function, not a real life function.
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Girl, thank you. Yeah, I do care. They're good people that haven't been advised well. Client is already on the war path to his attorney.