Discussion:Final Return for Bankrupt S Corp
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Discussion Forum Index --> Basic Tax Questions --> Final Return for Bankrupt S Corp
Discussion Forum Index --> Tax Questions --> Final Return for Bankrupt S Corp
| 11 September 2009 | |
| I'm working on an 1120S for a client who closed their business on Sept 30, 2008 and filed for corporate bankruptcy (Chapter 7) on Oct 8, 2008. An Order Approving Trustee's Report of No Distribution and Closing Estate was filed on March 3, 2009 and the corporate dissolution papers were filed with the state on March 26, 2009. It seems to me that I would need to file a 2009 1120S as well, but of course the client wants me to mark the 2008 return as final. Until the date the liabilities are discharged they are still on the corporate books and it seems that I should file a return for the year of the discharge. Is this correct? Is the date of the Order (March 3, 2009) the date of the discharge or would that be another date? I hate to drag this on another year for the client, but I know I can't just close the corp in 2008 because they want it that way. | |
| 11 September 2009 | |
| It may be a nitpicky matter, but corporate debts are not discharged in bankruptcy. The corporation just stops and creditors have to write off their receivables. | |
| 11 September 2009 | |
| For bankruptcy purposes, a corporate debt cannot be discharged.
However, for tax purposes, the dissolution itself will create COD income which could be excludible under the insolvency exception. | |
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