Assets on final 1120s

[Maxtax899]

On my s corp final 1120s return what is the best way to report or enter assets such as tools? In my case it is $600 of small handheld tools such as moisture meter, thermometer etc. I would like to keep them for personal use but I probably need to show them as distributed. Thanks for all of the help I have received from this forum!

[MaryK4]

You have to show the disposal on your books- you can take the property as a distribution, using fair market value as the amount of the distribution.

[Maxtax899]

Thank you! Is there a particular form that I will need to use in order to take it as a distribution?

[JosephS1]

No, there is no particular form to fill out for your distribution.  It is handled within the program in the "Shareholder Information" section. The following steps should assist you in entering the distribution:

The easiest way to get to the entry screen for shareholder distributions is to click on "Search" towards the top right corner and type in "shareholder distribution" in the search bar, then click on the jump feature. 

You should arrive at the screen showing below and click where it says "Yes, the corporation ...:

Click "Continue" and the following screen should appear:

Since the distribution you are asking about is for corporation property, you should enter the fair market value of the property distributed in the Property box and then click continue.

You will then need to enter and/or review the shareholder's stock and debt basis limitations for accuracy.  The questions and guidance within the program should assist you in completing this area.

@Maxtax899 

[Rick19744]

To be clear on this matter, liquidating distributions from an S corporation are not reflected on the tax return as distributions.

Liquidating distributions from an S corporation are reported on form 1099-DIV in the appropriate box; currently either box 9 or 10 determined by the type of liquidating distribution.

[Maxtax899]

I followed your instructions and everything's good however turbotax business gave me this message.

"If property other than cash was distributed, attach a statement to provide the following information.

The date the property was acquired.

The date the property was distributed

The property's FMV on date of distribution.

The corporations basis in the property."

Is there a form or way I can include this? 

Thank you!

[ThomasM125]

You can bring up the Miscellaneous Statement in TurboTax where you can enter your statement. Use the Forms Mode and then Open Form and type in Miscellaneous Statement to bring up the form.

[Maxtax899]

Thank you! Turbotax Business is asking for me to attach a statement regarding the property portion of my distribution. The one thing I am struggling with is "The Corporations Basis in the Property"? That is the one question I need on the statement that I am unsure of? Probably easy!

Thank you!

[PatriciaV]

The corporation's basis in the property is the purchase price less depreciation, which you should have in your accounting records.

Did you capitalize these tools for depreciation on a prior tax return? If they were purchased and reported as an expense, you don't need to record a distribution. Expensed purchases have no value at dissolution, other than perhaps their thrift store value. You would write off only inventory or those assets that were being depreciated.

As Rick19744 stated earlier, you should report your liquidating distribution on Form 1099-DIV. If you have no real assets (buildings, vehicles, equipment, inventory, etc.), then your only distribution would be remaining cash, if any.

[Maxtax899]

Ok. Thank you PatriciaV. I am seeing some light now! I did not capitalize these tools for depreciation on a previous tax return. They were all written off as a business expense on a tax return in the years that they were purchased. So you are saying that I do not need to record them as a distribution? That would make cash my only consideration.

[RobertB4444]

If the tools are fully depreciated then the tools are valued at zero dollars.  You don't need to enter a distribution for zero dollars.

So yes, just the cash.

@Maxtax899 

[lhudy]

Hello,

How should we write off the remaining undepreciated amounts of leasehold improvements in the final 1120S return? The leasehold improvements cannot be distributed and also the property will be demolished.

Is it possible to write it off as expense for the final year? I tried putting the assets as disposed off with zero sales price but it shows as capital loss in the K1s so the shareholder will only be able to deduct $3k capital loss per year. Thank you.

[RobertB4444]

Unfortunately the leasehold improvements are capital expenditures so they are a capital loss.  And, as you pointed out, a capital loss is deductible against capital gains or at a rate of $3000 a year.

@lhudy