Dissolving an LLC/S-corp That Never Actually Started Operating - IRS Filing Requirements?

You'll need to file a "final" tax return with the IRS even though you didn't have income. For an S-corp, that means filing Form 1120-S and checking the "final return" box. Since you elected S-corp status, the IRS is expecting that return. As for your startup costs, there's good news! These expenses can potentially follow you to the new business if the new entity is in the same or similar line of business (which it sounds like it is - dental practice). The IRS generally allows you to either deduct startup costs up to $5,000 in the first year with the remainder amortized over 15 years, or you can choose to amortize all costs over 15 years. Make sure you formally dissolve the LLC at the state level too - don't just abandon it or you could face ongoing state fees and filing requirements.

Hey, I went through almost the exact same situation last year with my marketing firm LLC/S-corp. I was pulling my hair out trying to figure out how to handle it properly with the IRS. I tried calling them multiple times but couldn't get through to anyone who could actually help with S-corp questions. I eventually found this tool called taxr.ai (https://taxr.ai) that really helped me sort through the paperwork and filing requirements. It analyzed my situation and gave me step-by-step guidance on how to properly close the entity and transfer my startup expenses. They have tax experts who specialize in business dissolution and can review your specific situation. The most helpful part was that it clarified exactly what forms I needed for the IRS (the final 1120-S like the other commenter mentioned) but also all the state-level paperwork that I had no idea about. Saved me from making some costly mistakes.

I just wanted to follow up and say I ended up using taxr.ai after seeing it mentioned here. Their business dissolution analysis was exactly what I needed. They identified that my specific situation qualified under section 195 of the tax code to carry over my startup expenses since my new business is substantially similar to the one I was closing. They helped me prepare all the documentation I'll need for the final 1120-S and showed me how to properly document the expense transfer. What was most helpful was that they flagged some equipment purchases I made that could be directly transferred to the new business rather than treated as startup costs. This apparently makes a difference in how quickly I can deduct them. Their guidance was way more specific than what my regular accountant offered. Definitely worth checking out if you're in a similar situation.

I see you're already getting tax advice, but I wanted to mention something about actually reaching the IRS if you have questions. When I was closing my S-corp last year, I had some specific questions about filing the final 1120-S that weren't addressed in any IRS publication. I spent WEEKS trying to get through to someone at the IRS business line. After being on hold for 3+ hours multiple times only to get disconnected, I found this service called Claimyr (https://claimyr.com) that actually got me through to an IRS agent in about 20 minutes. They have a demo video here that explains how it works: https://youtu.be/_kiP6q8DX5c The IRS agent ended up clearing up my confusion about reporting my startup assets on the final return, which saved me a ton in potential penalties. Just throwing this out there because talking to a real IRS rep was super helpful for my specific situation.

I owe everyone here an apology. After calling Claimyr a scam (sorry about that), I decided to try it myself since I've been struggling with my own IRS questions about closing my photography business. It actually worked exactly as described. I got a call back in about 35 minutes, and they connected me directly to an IRS business tax representative. The rep answered all my questions about how to handle my camera equipment on my final return - whether to report it as a sale to myself personally or transfer it to my new business entity. Turns out I would have been doing it completely wrong and potentially created a tax liability I didn't need to have. The rep walked me through exactly which forms to use and how to document everything. Saved me a lot more than what the service cost.

One important thing nobody's mentioned yet - make sure you're also properly dissolving the LLC at the state level! Each state has different requirements, but you typically need to: 1. File articles of dissolution or certificate of termination 2. Pay any outstanding taxes/fees to the state 3. Cancel any state permits or licenses 4. Notify creditors of the dissolution If you don't formally dissolve, you'll keep getting annual report requirements and could be on the hook for minimum franchise taxes or fees even though you're not operating. I learned this the hard way when I moved from California to Texas and ended up with $800 minimum franchise tax bills for years because I didn't properly dissolve my CA LLC.

Just wanted to add - I'm a dental practice consultant, and this situation is actually pretty common. One thing to watch for: if you purchased any specialized dental equipment for the practice that you're taking to the new location, make sure you document the transfer carefully. The IRS might consider this a "sale" from one business to another, which could trigger depreciation recapture if not handled correctly. Your new business would likely need to purchase these assets at fair market value from the old business. Also, don't forget about any security deposits for office space, insurance premiums, etc. Some of these might be partially refundable, which would offset some of your losses.

I went through a similar situation when I had to dissolve my consulting LLC before it generated any revenue. One thing that really helped was keeping detailed records of everything - not just receipts, but also documentation showing the business purpose of each expense and dates when they were incurred. For the IRS filing, since you elected S-corp status, you're absolutely required to file that final 1120-S even with zero income. The IRS computer system is expecting that return based on your election. Miss it and you could face penalties. Regarding your startup expenses, the good news is that dental practice expenses from one location can generally be carried over to another dental practice since it's the same line of business. The key is proper documentation and making sure your new Colorado practice is set up to properly inherit these costs. One tip: consider whether any of your equipment purchases might qualify as assets that can be directly transferred rather than treated as startup costs. Things like dental chairs, computers, or other equipment might be handled differently for tax purposes than purely startup expenses like licensing fees.