Discussion:Dissolving CA S-Corp: Assuming Corp Debts?
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Discussion Forum Index --> Consumer Questions --> Dissolving CA S-Corp: Assuming Corp Debts?
| 24 December 2007 | |
| When dissolving a CA (S-)Corporation using the "Certificate of Dissolution" form (DISS STK), there are at least two options in section 3 to check for a Corporation with remaining debts:
A. The Corporation's debts and liabilities have been paid as far as its assets permitted. B. The Corporation's debts and liabilities have been adequately provided for by their assumption and the name and address of the assumer is____________ Why would someone [ever] assume the debts and liabilities of a dissolving Corporation (Option B above) rather than just walk away (Option A above)? | |
| 26 December 2007 | |
| The obvious reason is, because the corporation is solvent. Satisfying the liabilities now might not make sense if they are not yet due or are contingent, and there is a tax or other reason to dissolve now.
If you are thinking of just having the corporation distribute its assets, become insolvent, and then either dissolve or just sit there, the shareholders would become liable under fraudulent transfer or bulk transfer laws anyway. | |
* Moving consumer question, and related responses, from an existing tax pro discussion about liquidating an S-corp shareholder:
Quietandshy (talk|edits) said: | 2 August 2008 |
| I have a S Corp and my business partner walked out on the bussiness almost a year ago. We are 50/50. We need to desolve the corporation. I have had a few time where he has responded to emails, but no progress. How can I take control of he shares so I can move forward with the desolution? Can I vote him out?
I am on the hook for a ton of money for invoices I signed personally for, can I go after him for abandament of the business? | |
| 2 August 2008 | |
| "can I go after him for abandament of the business?"
Only if it's a child care center, and there was a legal adoption. Otherwise, you must play it by the book. First, call a special meeting of the Board. Woops, can't do that, there's not a quorum. See if there's something in the Bylaws that will allow you to seize control: Act of Terror, Declaration of War, etc. Otherwise, it looks pretty grim. If he stays gone for 7 years, you might be able to have him declared dead, then you can hunt down his widder and children, and sue them. Overall, I'd see a lawyer, your lawyer. It sounds like your going to need one anyway to negotiate with all those creditors. P.S. I forgot to mention one more thing, if you can convince the government that you are too big to fail, you may qualify for a bailout. | |
| 2 August 2008 | |
| Get an attorney to help you. These are legal problems. You may want to buy back the shares he owns possibly at book value. The s-corp can buy back the shjares and then they are called treasury stock. These are possibilities if you wish to continue the business.
SEE AN ATTORNEY! | |
| 2 August 2008 | |
| There's one other thing, which I'm NOT suggesting, but merely exercising the right of free speech that we all enjoy. Look at the title of this post " Liquidating a shareholder". Now, it used to be that no one would go in business unless he had a friend of a friend that knew a friend who was a "leg breaker". Ahem. Myself, I keep a business relationship with a lesbian blue grass band. Not a hand has to be lifted when these ladies take on an assignment, once they roll up to some miscreants property, and start a pickin and a grinning, that boy will begin to hear the music. | |
| 2 August 2008 | |
| I'm liquidating in my pants from fear right now just thinking about that, Crow. | |
| 2 August 2008 | |
| I have the name of the group if anyone want's it. There all on the LPGA tour, so it's hard to round 'em up at certain times of the year. | |
| 2 August 2008 | |
| Wow - they're handy with clubs as well as stringed instruments! | |
