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oceansidescreen1
New Member

My husbands business changed from sole proprietor to s corp for 2019 how do I report this on our joint taxes?

 
2 Replies
Carl
Level 15

My husbands business changed from sole proprietor to s corp for 2019 how do I report this on our joint taxes?

Basically, (and I do mean *VERY* *BASICALLY*) you must first close the SCH C business on your joint return. Then you will complete and file what will be your first 1120-S Corporate return, issue K-1's to all owners of the business and use the K-1 to complete the personal tax return.

THe 1120-S Corporate tax return is due to the IRS by Mar 15, 2020. There is a $200 per month, per owner late filing penalty. So file it March 16th, and that's a minimum penalty of $200 for each owner of the S-Corp.

So first close the SCH C business. TO do this indicate that you "sold, closed or otherwise disposed of the business in 2019" and keep working it through. To successfully and completely close the business you must show the disposition of all assets and inventory, as well as the disposition of "ANY" vehicle used in the business, even if that vehicle use was less than 100% business use.

For each asset indicate "I stopped using this asset in the business in 2019" and work it through to show your disposition of each and every asset one at a time.  If assets will be transferred to the S-Corp, then on the SCH C indicate those assets were removed from the business for personal use.

Next, if your business carries an inventory, the EOY (End of Year) Inventory balance *MUST* be zero. No exceptions. If the inventory will be transferred to the S-Corp, then indicate it was removed from the business for personal use.

Next, if you have claimed any vehicle use while you've had that SCH C business, at a minimum you must indicate that the vehicle was removed from the business "for personal use". Even if that vehicle use was less than 100%.

Once this is done, then you can start on the 1120-S Corporate return.

DO NOT FILE ***ANY*** TAX RETURN until you have completed ***ALL*** tax returns and are satisfied with the outcome. Otherwise, you risk finding yourself in an IRS nightmare from which you will never awaken. I can practically guarantee it.

 

Critter
Level 15

My husbands business changed from sole proprietor to s corp for 2019 how do I report this on our joint taxes?

To prepare a corporate, trust or partnership return you would need Turbotax Business.  This is a separate program from Turbotax Home and Business or the Online Self Employed version.  TT Business is a program only available for desktop windows use (there is no on-line or Mac version.)  And if the S-corp is a calendar year business then it is due 3/15/20  unless you put it on extension.  If this is your first 1120-S form then I highly recommend you seek local professional for the first return to be educated on what is required ...

 

http://turbotax.intuit.com/small-business-taxes/

https://turbotax.intuit.com/small-business-taxes/forms-business.jsp

https://ttlc.intuit.com/questions/1917225-is-turbotax-business-right-for-me

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