A few comments regarding your questions:
- When you sell the assets this will generate a gain or loss. This will be a corporate level gain or loss that is passed through to the shareholder on the K-1.
- The cash will then be used to pay down the debt. At this point, you shouldn't have anything listed in the asset section; as there are no more assets (you indicate that nothing is being distributed to the shareholder).
- I would just leave the debt on the balance sheet.
- Just leave the capital stock on the balance sheet.
- As the shareholder pays off the debt, they will get a capital loss equal to the principal paid on the debt.
- No additional losses will be able to be deducted, since as you noted, there is no basis.
- Make sure you dissolve the corporation with the Secretary of State.
*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.
