I dissolved LLC taxed as S Corp in 2024. It was simple business, just me as consultant. I was employee of my company, paid out most earnings as wages. The only asset was $51 remaining depreciation on a computer. I just closed down with a sale. The $51 remaining depreciation was written off. I just closed down without a sale.
Filling out my Schedule K-1 on my personal taxes Easy Step gave me four options to “Describe S corporation Disposal”.
1. Sold it outright (complete dissolution)
2. Sold it, receiving payments
3. Disposed of it, but not by selling
4. None of the above.
I checked option 4.
However, running Smart Check near completion T Tax now says I must check one of the top 3 choices. Option #4 no longer exists when I look at the forms. Closing down without checking #1, #2 or #3 is not allowed.
Option #3 seems like it might be a good choice, but the online help for #3 says “ Other disposition include: Gifted interest, transferred interest without a sale or sold to a related party.” None of those apply to me.
“None of the above” seems perfect in my situation bc nothing was sold, there are no assets to sell.
If “None of the above” is not a valid choice in T Tax, should I just choose option #1, “Sold it outright” for $1, then mark sales expenses as $1? This way, there is not gain or loss, but T Tax shows my S Corp stock basis is $1,064. That is incorrect, but not worth the trouble trying to fix mistakes of past bookkeepers. It’s actually near zero. I shouldn’t owe taxes on the mythical $1,064. Will T Tax & IRS will try to tax me a second time for this non-existent distribution of $1,064.
Thank you,
Eric
