Discussion:S Corp bankruptcy

My client operated a restaurant/s-corp which was forced to close. They had an SBA loan, 2 credit cards, and a business loan, all of which were discharged in bankruptcy. The physical assets of the corporation were security for the SBA loan, so the bank repoed the store itself. I have read the IRS Bankruptcy Tax Guide, and know all about the reduction in tax attributes. In this case, the only tax attributes available are basis in its remaining assets. I have a couple technical questions on how to report this info. As an FYI, I use CS Ultratax.

1) Disposal of the assets used to secure the SBA loan. Do I just put them "out of service" or "retired"? I don't think that doing a disposal would be the best option, as this would generate a form 4797. I know I need to put the excluded income from discharge of debt on Form 982.

2) The intangible assets would be all that remains after the bankruptcy. The bankruptcy tax guide says to reduce the tax attributes in the tax year following the discharge of indebtedness. The bankruptcy occurred in 2007. So do I do the 2008 return (which will be the final return) and adjust the cost of the intangible assets?

I hope this makes sense. If not, please let me know. Thanks for all your help!

Ben

Question two was about intangible assets see Riley2 answer and your answer Tcaccounting.

I quess I need to be very specific in my answers.

Does the Cancellation of Debt amount get put on Schedule M-1? It's got to go somewhere and that's the only place I can think to put it (as tax-exempt income).

Also, back to the Tcaaccounting's question 1), I don't understand the answers given to this question. These assets that were repoed need to come off the books somehow and there will be a loss because there still is some net book value to these assets. I can't think of how to get rid of them but put them on a 4797.

Any help you can give would be greatly appreciated.

I have a situation where the shareholder went bankrupt, but the corporation was "sold" and did not file bankruptcy. The shareholder had used credit cards for expenses and contributed loan proceeds to the corporation from her own funds. These debts were forgiven as part of her personal bankruptcy. The situation is such that at the beginning of the year the shareholder had about 25K of equity, losses for 2008 were about 30K, and she distributed about 7K to herself throughout the year. Approximately 113k of contributed proceeds were forgiven in her personal bankruptcy. It seems to me that the distribution in excess of basis is taxable, however the portion foriven in bankruptcy is not. Any hemp with my though process on this would be appreciated.