S Corp filing final return for 2019, what about expenses incurred in 2020?

[nerry]

I am a sole shareholder S Corp and am filing a final return for 2019. I took a board resolution to close it in 2019. However, I have about 1500$ of expenses in 2020, mostly closing expenses and franchise taxes. Can I claim these as expenses on my 2019 personal return? If not, what happens to them? There won't be a K-1 for 2020...

[Rick19744]

@nerry  said "Can I claim these as expenses on my 2018 personal return?"

I assume you mean 2020?

Well unfortunately since the S corporation is closed, there will not be any ordinary business expense deduction.

What you will be able to do, is take a capital loss for these expenses; form 8949 and Sch D.

[nerry]

Hi, thanks for the response and sorry about the typo. I meant 2019 personal returns/K-1. The expenses in 2020 were borne by the S Corp, paid through the S Corp bank account as I haven't filed the final return yet and/or closed the account (going to do that before March 15th). I guess I was wondering if I could classify them as closing expenses (which they are) and claim them in the 2019 tax year (for the S Corp and K-1),  

[Rick19744 · Accepted solution]

You don't technically have a final 2019 return.

If you are still paying expenses out of the S corp and will not make the final liquidating distribution(s) until 2020, then the 2020 return should be the final tax return.

Additionally, liquidating distributions from an S corporation need to be reported on a form 1099-DIV and are not reported on the K-1.

[nerry]

Ohok thank you so much

[Rick19744]

Welcome.

Also keep in mind that the final return will be due the 15th day of the third month AFTER your final liquidating distribution. 

This will require you to complete the return on the 2019 form crossing out 2019 and replacing it with 2020.

[nerry]

Hi @Rick19744 

thanks for that info. I don't have final liquidating distributions as the bank balance was at zero after paying off bills and shareholder loans. So there is no 1099-DIV?

 However, I have capital contributions that went to zero. After passing through the losses, I still have a stock basis of a few thousand. Does the company have to issue me, the sole shareholder, anything to reflect this? Or file something along with the business taxes? Looks to me like basis is maintained off of TT but not sure if capital losses/gains have to be entered/reported. 

Do I report my remaining basis on schedule D?

[Rick19744]

Follow-up comments:

• Have you been maintaining your basis in the S corp stock?  This consists of your initial capital contribution and then updating the basis schedule annually for the applicable lines on the K-1.
• If the answer to the first bullet is 'yes", then any stock basis remaining will be included on your personal tax return on form 8949 and Sch D as a long-term capital loss.
• Based on your response, you indicate that there were no liquidating distributions.  If that is the case, then no form 1099-DIV is required.
• Finally, you most likely will need to contact the Secretary of State to dissolve the business.  There may be a cost here which will impact your basis and ultimate loss as noted above.