Closing Business Bank Account

[user17575426023]

We sold our property back in 2018 and shut our business down after 40 years. It was just me and my father and he past in 2022 so I am the only officer of the corporation. We left our business checking open because we were receiving payments on the property. We received the payoff the other day and will be closing the account out. I am in Texas. My CPA says I will not have to show this as income but I am confused. I will paste in her what she said because I have no clue. I just want to make sure it doesn't come back to bite me. Thanks Michael

"Because the basis of your stock in the corporation is equal to the cash in the bank account, you can start taking money from the corporation whenever you want. You will have to report the distribution as an installment sale of your "sale of the corporate stock" but it will be a net -0- effect on your personal tax return.  This means that I don't think this will impact your tax return, or your subsidies. In my opinion, you should be able to take the whole amount since it will net to -0-, and will save you from having to create an installment sale on your personal return."

[Mike9241]

if the CPA is correct about your basis being equal to the bank account and there being no other assets (even with zero tax basis), there would be no tax effect on the distribution. However, I would report it on schedule D. 

A final corporate return needs to be filed, and it may raise certain questions with the IRS if these other forms are not filed. When a corporate liquidates it's supposed to file these forms: Form 966 (section 331 in your situation), Form 1096 with form 1099-Div (box 9)

see form 966 for the time to file

https://www.irs.gov/pub/irs-pdf/f966.pdf 

note that liquidation/final return ends any future filing requirements with the IRS, state laws determine what's required to terminate the corporation for legal purposes.  

[user17575426023]

I am praying she is right and sure she will be filing the forms necessary, I just didn’t understand what the Basis is. Thanks Michael