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asset sale and liquidation of 1120S

Forum|Forum|2 years ago
March 6, 2024
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We sold all of the assets (depreciable assets) of our 1120S and then liquidated the S corp by distributing the note receivable and remaining cash to the sole shareholder. How do I show the asset sale and then the liquidation in Turbo Tax?

TurboTax Business Windows

Best answer by Mike9241

if the assets were sold while owned by the S-corp, the sales would be reported on the S-corp return.

if the property (depreciable assets) were distributed to him they were deemed sold at FMV by the S-corp. this needs to be reported on its return. His basis in those assets would be their FMV. If converted to personal use any gain on sale is taxable but a loss is not deductible.

indicate final k-1

quickzoom to the disposition worksheet and enter the information

the note receivable and cash would be the proceeds.

the issue is that you need to know his tax basis before the distribution of these items,

in theory, if this was always an s corp and he was always the only shareholder, his basis before liquidation would be the same as what was received in liquidation.

form 7203 as part of his 1040 will also need to be completed.

M

Mike9241Answer

if the assets were sold while owned by the S-corp, the sales would be reported on the S-corp return.

if the property (depreciable assets) were distributed to him they were deemed sold at FMV by the S-corp. this needs to be reported on its return. His basis in those assets would be their FMV. If converted to personal use any gain on sale is taxable but a loss is not deductible.

indicate final k-1

quickzoom to the disposition worksheet and enter the information

the note receivable and cash would be the proceeds.

the issue is that you need to know his tax basis before the distribution of these items,

in theory, if this was always an s corp and he was always the only shareholder, his basis before liquidation would be the same as what was received in liquidation.

form 7203 as part of his 1040 will also need to be completed.

M

mjfedewa1Author

Thanks so much for the help - so when I enter the sale do I have to enter each asset as being sold individually or can I just show it as a lump sum sale of all assets?

PatriciaV

If you have a few assets, you can allocate the sale proceeds and expenses to each asset based on the relative cost basis. But if you have one main asset and many small ones, you may instead "write off" the smaller assets at their remaining basis with a zero sale amount. Then report the entire sale to the main asset. The net result is the same.

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