Filing a final 1120

[dagshop]

I am preparing a final return for a corporation. All assets were distributed to shareholders as of year-end except the amount to pay accrued income taxes. Is it appropriate to answer that there are 0 shareholders for question 10, Sch K, and No to question 4b, Sch K ( asking if any individual owns more than 20%)? Also, is it appropriate to show $0 for assets, ignoring the cash left at  to pay the final income tax?

[M-MTax · Accepted solution]

You know if you adopted a plan to dissolve or liquidate you're supposed to file form 966? https://www.irs.gov/pub/irs-pdf/f966.pdf

The number of shareholders should be the number immediately before the dissolution as should the answer to individuals owning more than 20%......assets can be zeroed even if there's a small reserve.

[dagshop]

Thank you very much. I did already file the 966.

[Rick19744]

A couple of follow-up questions:

• what assets were distributed to the shareholders?
• how did you report the shareholder distributions?

[dagshop]

Distributions were cash and mineral rights. I will report a capital gain on the mineral rights on the final return.  I will report distributions on question 13 of Schedule K, and will issue a 2021 1099-DIV to the shareholders next January.

[dagshop]

I have a follow-up question on distributions, regarding Sch K question 13. If mineral rights were distributed, which had $0 book value but $10,000 market value, is it correct to include $0 for them in question 13, even though they are to be reported on the 1099-DIV at market value?