Solved: When to start filing corporate returns
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When to start filing corporate returns

2019 sole proprietorahip. In 2020, I incorporated and obtained the EIN. For 2019, do i continue to file as a sole proprietorship or switch to filing corporate returns. 

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Level 15

When to start filing corporate returns

The corporation will file a return (either an 1120 for a C corporation or 1120-S for an S corporation) beginning with the tax year the corporation starts business operations, presumably the 2020 tax year.

 

If you operated as a sole proprietor at any time during the 2020 tax year, then you will have to prepare a Schedule C for that part of the year the sole proprietorship was open for business.

 

Note that you can transfer assets from your sole proprietorship to the newly formed corporation without recognizing any gain or loss provided you only receive stock in exchange and are in control of the corporation immediately thereafter.

 

You should definitely seek professional tax and legal guidance for this matter, particularly since 2020 will be the first year of the corporation's existence and operation.

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1 Reply
Level 15

When to start filing corporate returns

The corporation will file a return (either an 1120 for a C corporation or 1120-S for an S corporation) beginning with the tax year the corporation starts business operations, presumably the 2020 tax year.

 

If you operated as a sole proprietor at any time during the 2020 tax year, then you will have to prepare a Schedule C for that part of the year the sole proprietorship was open for business.

 

Note that you can transfer assets from your sole proprietorship to the newly formed corporation without recognizing any gain or loss provided you only receive stock in exchange and are in control of the corporation immediately thereafter.

 

You should definitely seek professional tax and legal guidance for this matter, particularly since 2020 will be the first year of the corporation's existence and operation.

View solution in original post

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