I believe the link provided by @soultax09 has an error.
The article states that there will be built-in gains (BIG) tax when the adjusted basis of the assets exceeds the FMV; which is actually backwards.
I would also recommend that you consult with a tax professional as there are issues that need addressed and you need to understand how and when the BIG tax comes into play:
- Are you cash basis? If so, this has implications.
- Do you have an overall BIG?
- If you do have an overall BIG then you need to understand when and if you will need to pay any tax. There are taxable income limitations, etc.
Your facts are brief, however, in reading what you provided, you may also have C corp earnings and profits which will need to be tracked and reported on the form 1120S. This comes into play if you have distributions that exceed AAA (accumulated adjustment account) as an S corporation.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
