Final 1120 for a "Voided" C Corp in Delaware

[Anonymous]

Is standard operating procedure to file Final 1120 return for C Corporation that is administratively voided or forfeited by the state for non-payment of franchise tax (Delaware)?

Preparing 1120 (Final Checkbox) and Form 966.

Do voided corporations simply file Final 1120 or must they re-instate Delaware C Corp business license, payback franchise taxes, and file proper dissolution with the state before their Final return?

[Anonymous_]

Yes, a final return needs to be filed.

@Rick19744 

[Anonymous]

Does Form 966 need to be attached for Voided C Corp which has not obtained a proper "certificate of dissolution" from not maintaining registered agent/franchise fees?

Form 966 preparation instruction only indicate "within 30 days after the resolution or plan is adopted to dissolve the corporation" which is typically from board or shareholder resolution and a proper dissolution

Tricky to understand if Filing IRS 1120 final would be sufficient to consider it "dissolved", given it can be revived in Delaware due to "Voided" status instead of proper Certificate of Dissolution.

[Mike9241]

the question is whether a 966 needs to be filed at all. if so it's filed separately from the 1120

per the instructions

A corporation must file Form 966 if it( adopts a resolution or plan to dissolve the corporation or liquidate any of its stock.

In typical scenarios of voluntary liquidation, the company’s board of directors, or other ownership, initiate a liquidation resolution. This resolution to cease the company’s operations and begin liquidation is enacted when approved by shareholders in a vote. This is where shareholders can liquidate a company. As such, while shareholders might not be the ones who initiate the decision to liquidate a company, it is there choice whether to begin liquidating or not.

my guess is no such resolution was adopted. you have an administrative liquidation for failure to pay franchise taxes. quite common when there are no assets and therefore no funds to pay for the annual fees and really no reason to keep it alive.  

if you did adopt such a resolution then to the 966 you must attach a certified copy of the resolution or plan and all amendments or supplements not previously filed. I kind of doubt you have one since this would require a written plan approved by the a majority of the shareholders. board of directors and certified by an officer 

no plan or resolution no 966. 

just a final return. so the IRS doesn't bug you.

as for the possibility of reinstating corp by paying those fees. that may work at the state level but most likely the IRS has canceled the EIN  and for liability protection starting a new corp may be best. 

[Rick19744]

To me, it's not clear on what the end goal is here:

• Will there be fees paid to the state in order to properly dissolve?
  • If any fees need to be paid, then you shouldn't file a final return until that has occurred
• Is there an intent to continue with the corporation?
  • This determines whether or not a final return should be filed
• The form 966 is most likely not filed by at least 50% of companies that file a final return.
  • Not condoning this, it is just that there are many small companies that just are not aware of this requirement and it never gets done.
  • There is no internal cross reference between the filing of form 966 and the filing of a final 1120.
  • As has been stated, the form 966 is a separate filing.
• If there are no fees to be paid and the company has no intent to continue doing business, then at this point just file a final return.  This is technically due the 15th day of the 4th month upon which the company was administratively terminated by the state; as at this point the company is no longer "in business".
• The filing of the final return is not the "dissolution" of the company, it is just advising the IRS that the company is no longer in business.  The dissolution is a state matter.

[Anonymous]

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@Rick19744 wrote:

To me, it's not clear on what the end goal is here

• If there are no fees to be paid and the company has no intent to continue doing business, then at this point just file a final return.  This is technically due the 15th day of the 4th month upon which the company was administratively terminated by the state; as at this point the company is no longer "in business".

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The corporation does not have sufficient funds to cover dissolution and it's been voided by the state. Can it file a final 1120 return even with outstanding liability to the state for Franchise Taxes?

[Rick19744]

Follow-up comments:

• The facts have not provided the activity level of the corporation up to the point of being administratively terminated.
• My assumption is that there is most likely no activity; but once again, only an assumption.
• I have previously provided the technical due date of the final return.
• If there is essentially no activity, based on my assumption, then I would most likely file a final federal and state tax return.
• I would also recommend you meet with a legal professional to understand any shareholder responsibility for any unpaid state filing fees; will penalties accumulate? will interest be added to the penalties? what is the responsibility of the shareholder(s) for any unpaid state fees?