I was a shareholder of a S-Corp. The S-Corp closed. All the shareholders left or were bought out by me.
The S-Corp did major improvements (new roof, added a kitchen, parking lot paving, etc.) to the building they were using but did not own. They took Special Depreciation on most of the improvements. Everyone disagrees on how to handle the depreciation the S-Corp took. The improvements were only on year 9 of a 15 year depreciation. How do you liquidate depreciation on improvements?
1. The Tax Accountant says just list it on the remaining shareholder's tax return (me) and continue the depreciation as it was. It's a "pass through" transaction.
2. An attorney says that the difference between Special Depreciation and MACRS must be reported as gain and all depreciation stops.
3. Another Tax consultant says that since the assets "were purchased" with remaining depreciation, they need to be listed as "purchased as New-to-Me" and must start depreciation over at FMV and a new depreciation life.
I don't know. My head hurts.
