A C corporation has incurred substantial losses and the owners have decided to close the
business. What considerations should the owners make in this termination? Should they
consider making an S election and then later, terminating the S corporation? If...
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A C corporation has incurred substantial losses and the owners have decided to close the
business. What considerations should the owners make in this termination? Should they
consider making an S election and then later, terminating the S corporation? If you were their
tax advisor, what would you recommend?
When deciding to close a C corporation, the company’s assets factor into how things are
handled. Liquidating is part of closing the Corporation and questions such as “will the assets
sell at a gain or loss (selling above, at, or below market value)? Another question is can the
company pay all of its liabilities? The shareholders are responsible for a limited portion of
these debts and if the liquidation does not cover the liabilities they will have to suffer the loss
of their capital (their entire investment) because they would end up receiving nothing.
To close a corporation a disclosure form to completely end the corporation is filed with the
state it is incorporated. The corpo
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