I incorporated a small business in Jun 2014. It only lasted 2 years and was dissolved in Jun 2016. I have been amortizing the startup costs over 15 years. Turbotax calculated only 6 months of amortization for 2016 (makes sense). However, can I claim the remaining 13 years of amortized start up costs? They are indeed a "loss" to the business. How do I do it even though the corporation is dissolved?
We're sorry to hear about your business; but the tax treatment of your question is fairly straightforward.
In organizing your S-Corporation, you evidently "capitalized" your start-up costs under Sections 195 and 248 (of the Internal Revenue Code), and were dutifully amortizing them (functionally equivalent to straight-line depreciation) over the prescribed 15-year period. That is the correct process to follow.
It is also correct, then, upon dissolution of your company, that any remaining unamortized intangibles (such as start-up costs), are considered "capital losses" to the business. As an S-Corporation, a type of flow-through tax entity, that capital loss will then pass along to the S-Corporation owners, and they can then ultimately utilize that capital loss on their own tax return(s).
To be highly specific, take the unamortized amount as a long-term capital loss on Form 1120S, Schedule D. That will then transfer over to Form 1120S, Schedule K, Line 8a. This, in turn, will flow onto the individual shareholders' Schedule K-1s (or all of it to you, if you're the 100% stockholder). In reporting the capital loss, use the remaining unamortized amount as the cost basis, and input the sale price as zero. You can also type in a brief description on the tax return line identifying what this item is, so the IRS will be able to identify the nature of the reported loss.
Thanks for asking this important question.