Received a 1099-MISC for defunct business

[huyhuy]

I received a grant which was reported as a 1099-MISC with the EIN of my now-defunct business which was an S-Corp. Let's all it "Defunct Business."  It has been absorbed into another S-corp with a new EIN.

I am thinking about just reporting the 1099 into my 1040 directly and paying the tax on the grant amount. I am not trying to avoid paying the tax. I just don't want to file a 1120s for the "Defunct Business" just to report one 1099-MISC.

Is this the right way to go or will the IRS come asking my old "Defunct Business" about the 1099-MISC?

Thank you.

[MarilynG1]

Was a Final Return filed for the S-Corp?  If not, you may need to file the Final Return for the S-Corp and report the income.  As long as you never officially dissolve an S corporation, its shareholders remain liable for state and federal filings and tax obligations.

Here's more info from the IRS on Closing a Business.

If the S-Corp was filed as closed (final K-1's issued), then you could report the 1099-Misc income as Schedule C income, although you may be contacted by the IRS to verify.

@huyhuy 

[huyhuy]

Yes, the final return was filed for the "Defunct Business" in 2021.  It's my plan to report the 1099-MISC income as Schedule C income on my 1040. That seems to be the easiest thing to do.  However, I am not looking forward to having to clarify to the IRS should they come asking 🙂

Thank you for your help.