Can a C Corporation stock sale file two 1120 tax returns in one year? One 1120 return for previous owners for Jan - Aug period. One 1120 return for new owners for Sept - Dec period.

[IRonMaN · Accepted solution]

You only file one tax return.  The shareholders might have changed but it is still the same corporation.

[smcallister]

So are there special forms to establish the split between the stockholders (Sellers and Buyers).  I have to determine who is responsible for what taxes based on the periods of Jan - Aug and Sept - Dec. 

[IRonMaN]

You said it is a C corp and they sold the stock.  If that is accurate, there is no split and the corporation itself pays the tax owed for the full 12 months.

[smcallister]

Yes, that is accurate.  I understand the taxes go through the corporation but the new owners are not wanting to pay the tax on the sale of the stock.  They are wanting to send a tax bill to the previous owners to make up what the corporation is paying in the overall tax for the year.

[IRonMaN]

The new owners pay nothing for the sale of the stock - the previous owners are responsible for reporting any gain and paying the tax.  As far as the new owners paying tax for corporate earnings for the first part of the year, they are out of luck unless there was something in the sales agreement that stated that the old owners were going to reimburse the corporation for taxes for that period of time.

[Terry53029]

That issue should have been addressed at the sale of the corp. At this stage, as @IRonMaN said the corp owes the tax. If they want they can send a bill to old owners, but don't know if they will have much luck collecting. Good luck

[smcallister]

Thank you!

[smcallister]

Thank you