Closing S corp

[lakearea1]

I have been an S corp since 2010.  I am closing the business.  I don't know if I should close it in 2022 or continue it in to 2023.  I will have no more payroll in 2023 and no income.  There are a few assets such as an older bobcat and vehicle that I want to keep for myself.  I need to know how to transfer these assets to me as the only shareholder.  I will have money left in the business as well and want to know the best way to handle all of this for tax purposes.  I have about $63000 owner equity and $42000 retained earnings and approximately $22000 in loans to myself for funds I had to put in during the years.  The FMV of the assets I want to keep would be around $66000.  When I look at turbo tax it asks for forms that I have never used.  I am just not sure the best way to handle this.  I have not filed dissolution papers for my corporation yet.  Also not sure if I need to file form 966.  When I read it it does not seem to be for my S Corp.

[RobertB4444]

I highly recommend seeking out a tax professional for this.  You have a lot of things that can go wrong with dissolving a business at both the federal and state levels and the last thing you want is a mistake in dissolving the business to follow you for years.

If you insist on doing this yourself then you will indicate that you closed or ended the business in whatever year is the last one with income or expenses (so you'll keep it open for 2023 if you've spent money this year even if you have no income).  You will indicate on each of the assets how you disposed of them (converted to personal use is one of the options).  If you have any final year deductions or credits they will be added to your K1 for use on your personal return.

@lakearea1 

[Mike9241]

2022 is passed.  when you distribute appreciated assets (assets having a fair market value greater than their tax basis) the S-Corp recognizes gain as if the asset were sold for that FMV. if this was always an S-Corp, no distributions in excess of tax basis were ever made, the bookkeeping has been correct over the years, you never acquired the stock of another shareholder, and appreciated property was never contributed to the corp.  the value of the assets distributed should equal your tax basis in the S-Corp.  First, you would treat your loans as being paid off. the excess distributed should equal the sum lines 22 through 24 on schedule L after taking into account the gain on those assets. 

if you look closely at form 966 there's a checkbox for 1120S. the instructions say.

A corporation (or a farmer’s cooperative) must file Form 966 if it adopts a resolution or plan to dissolve the
corporation or liquidate any of its stock. Exempt organizations and qualified subchapter S subsidiaries should not file Form 966. That's not you.  I have to admit I've seen many corps liquidate and never file the form.

maybe others will post their thoughts on the 966

however, if you were an LLC that elected to be taxed as an S-Corp. then I question the need of the 966 because under state law you are probably not a corporation. 

corporation liquidations can be complicated, so I would advise the use of a pro for the final return.