Thank you, Rick! So the final balance sheet and the final 1120S would have zero assets, one debt, capital stock and retaining earnings. Sounds accurate?
In regards to this : "As the shareholder pays off the debt, they will get a capital loss equal to the principal paid on the debt."
The shareholder likely won't pay off the debt in the same year the 1120S final is filed, and the corporation is dissolved, so when he does, no other adjustments on the balance sheet can be made or would need to be since the corporation would be dissolved at that point, correct? And no interest expense can be taken at that point anymore, correct?
And, do we use Form 8949 to generate a capital loss? The basis would be the amount of the debt and proceeds as " zero"? And the 3k a year capital loss limitation would apply to this?
Also, likely the Corporation's final return will have a loss so the K-1 will reflect the loss. Since the shareholder has no basis, he would not be able to claim that loss on 1040, correct? So the loss is suspended and lost? Or would this assumed debt create debt basis for the shareholder to be able to do that?
@Rick19744
