C Corporation Tax Questions - death of sole shareholder

[MSMG_2]

Feb. 2021 incorporated.

Nov.  2021 death of sole shareholder/owner. All engineering services cease. All corporate function ceases to exist.

Jan. 2022 payment of 2021 invoices received.

Feb. 2022, spouse substituted in as shareholder to wind down corporation, file/pay taxes, creditors, etc.

Do I file taxes for 2021 and 2022, and file a form 966?

Can I file a tax return for 2022 NOW, or do I have to wait until the end of this year when 2022 tax forms are available?

Are C Corporation Taxes due MARCH 15TH or APRIL 15TH.

[Anonymous_]

C corporation returns (Form 1120) are due April 15th for calendar year corporations, but the corporation could very well have adopted a fiscal year.

@Rick19744 

[MSMG_2]

I just looked up the SS-4 application which stated incorporated date 2.1.2021

States:  Closing month of accounting year: FEBRUARY

Well, to my surprise it is a fiscal year.  

So,

1. When are the taxes due?

2. All revenue received within the fiscal tax year. Does that mean just one tax return?

Or will two tax returns be required because the final distribution to the shareholder or shareholder estate is AFTER the fiscal year ended?

[Rick19744]

Based on your initial facts and follow-up response:

• You technically need to file Articles of Dissolution with the appropriate State.
• You should file Form 966 within 30 days of filing the Articles of Dissolution.
• Since you are still winding down or the wind down occurred after the year end, you will have two returns to file.
  • One for the year ended 2/28/2022.  This will be on a 2021 tax form
  • The final return.  This return is due by the 15th day of the fourth month after the liquidating distribution has occurred.
  • Since the 2022 tax forms will not be available for quite some time, and hopefully not much needs to be reported on the final return, I would just recommend using a 2021 tax form, mark out the 2021 on each form and put 2022.
• Liquidating distributions need to be reported on form 1099-DIV
• Keep in mind that if any property was included in the liquidating distribution, the rules are that it is as if you sold the property at FMV and gain reported on the 1120; including any depreciation recapture.
• Any taxes for the 2021 tax return need to be paid by the due date of the return (June 15).  Estimated taxes should have been filed during 2021 so make sure you determine if any had been paid.

[MSMG_2]

Thank you.  I didn't know that I could mark out the year on the tax form. I will print the corporate turbo tax form prepared for the tax year 2022, changing the 2021 to 2022.

My spouse got sick and died before any assets were purchased. Such activity was anticipated to happen in the fall last year but ... too late.  Since your software indicated that no assets were a red flag, I entered the Adobe DC subscription.  The money received in Feb. 2022 is actually THE asset.

I believe your corporate turbo tax was going to issue a K-1 for distribution to the sole shareholder (at the very end), not a 1099-DIV.

Can Form 966 be filed separately or must I submit with the current taxes?

[ThomasM125]

Form 966 can be filed separately.

[MSMG_2]

If incorporated on Feb. 1, 2021 and the tax year is February - February, is the tax year:

February 1, 2021 through February 28, 2022?  (as opposed to Feb. 1, 2021 - Feb. 1, 2022?)

[ThomasM125]

Since your first day is February 1, 2021, the ending day would be January 31, 2022. You can't file a tax return for more than twelve months.

[MSMG_2]

Thank you.

So then, the information above from "Rick19744" would need to be modified.

Meaning the tax return would be due MAY 15TH, instead of JUNE 15TH? Is that correct?

Tax Return February 1, 2021 through Jan. 31, 2022. Return due May 15th?

As opposed to Feb 1, 2021 through Feb. 28, 2022. Return due June 15th?

Because above, I did indicate that the incorporated date was 2.1.2021

Closing month of accounting year: FEBRUARY

and was advised that the tax return would be through Feb. 28, 2022 which is different than what you listed.

Although what you listed sounds reasonable.  I just want to do it right.

[Rick19744]

A few follow-up comments:

• Based on a Feb year end, your tax return will be due May 15th.
• As noted previously, the final return will be due the 15th day of the third month after the liquidating distribution.
• One of your other comments indicate that "TT was going to issue a K-1...".  A C corporation does not issue K-1's.  So based on this comment is the entity a C corporation or an S corporation?  This will impact any responses.
• It would be extremely rare for an S corporation to have a Feb year end, so I'm not sure where you are getting the K-1 comment from TT.  This would tell me you provided incorrect information to TT at some point.

[MSMG_2]

It is a "C" Corporation.

There are no assets to liquidate as the owner, my spouse, died before purchasing any.

There were only invoices which are an asset but I can't liquidate cash.

K-1 came from the Turbo Tax Software which asked if K-1 had been issued.

The response provided two weeks ago included:

"

• The final return.  This return is due by the 15th day of the fourth month after the liquidating distribution has occurred."

not three months. 

Thanks for any input you can provide.

[MSMG_2]

Tax return is due June 15, 2022.

I called the IRS for assistance since I didn't see a response to the questions raised yesterday.

Thank you anyway.  I know you're not tax professionals and cannot give tax advice but you did the best you could and I really do appreciate it.

Thank you.