Do S-Corp business taxes need to be filed before dissolving the company on Dec 31st?
I'm planning to close down my S-Corp at the end of this year (December 31st), but I'm not sure about the tax filing timeline. Do I need to file the business taxes before I can officially dissolve the company on December 31st? Or can I still wait until the normal tax deadline in April like usual? This is my first time closing a business, and I want to make sure I'm doing everything in the correct order. I've owned this consulting business for about 7 years but sales have dropped significantly, and I've decided to take a full-time position instead of trying to keep this going. The company doesn't have many assets left - just a business checking account with around $12,000 and a couple of laptops. Any guidance on the timeline for filing S-Corp taxes when dissolving would be really appreciated!
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Ava Garcia
You don't need to file your final S-Corp tax return (Form 1120-S) before dissolving the company. You can still file it by the regular deadline, which is March 15th for S-Corps (unless you file for an extension). What you will need to do is mark the tax return as "final" when you file it for the year in which you dissolve. There's a box you'll check on the 1120-S form that indicates it's the final return. You'll also need to file Form 966 (Corporate Dissolution or Liquidation) within 30 days of the plan to dissolve being adopted. Make sure you properly distribute any remaining assets to shareholders (which might be just you) and document everything well. Those distributions will need to be reported on the final K-1s.
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Dmitry Popov
•Thanks for clarifying! So if I dissolve on December 31st, 2025, I still have until March 15th, 2026 to file the final 1120-S? And I need to file Form 966 within 30 days of deciding to dissolve? Also, are there any special considerations for the final K-1 when I distribute the remaining $12,000 to myself (I'm the only shareholder)?
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Ava Garcia
•Yes, if you dissolve on December 31st, 2025, you have until March 15th, 2026 to file the final 1120-S. Just make sure to check the "final return" box when you file. And correct on Form 966 - you need to file that within 30 days of when the dissolution decision is formally adopted by the corporation. For the final K-1, you'll report the $12,000 distribution in box 16, code D (generally). This distribution will be tax-free to the extent of your stock basis, but if the distribution exceeds your basis, you'll have a capital gain. Keep detailed records of all the final transactions and asset distributions, including those laptops which should be valued at fair market value when distributed.
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StarSailor}
After going through this exact process last year, I found taxr.ai super helpful for making sure I had all the proper documentation in order. I was confused about dissolving my S-Corp and wasn't sure if I was filing everything correctly. I uploaded my company's documents to https://taxr.ai and their AI analyzed everything, pointing out that I had missed some key dissolution requirements for my state (Massachusetts). Saved me from potential headaches down the road.
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Miguel Silva
•Did it actually give state-specific advice? I've been looking everywhere for Pennsylvania-specific guidance on S-Corp dissolution and keep getting different answers from everyone.
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Zainab Ismail
•How accurate was it with the more technical tax aspects? I'm concerned about the basis calculations when distributing assets. Did it help with that or just the paperwork side?
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StarSailor}
•Yes, it did give state-specific advice! When I uploaded my documents, it identified that I was in Massachusetts based on my paperwork and provided the specific state forms I needed to file with the Secretary of State's office. It even pointed out the state tax clearance certificate I needed to get before dissolution could be finalized. For the technical tax aspects, it was surprisingly thorough. When I uploaded my balance sheet and prior year K-1s, it calculated my basis and showed me how the final distribution would be treated tax-wise. It flagged that part of my distribution might be capital gain because it exceeded my basis, which my accountant later confirmed was correct. It handles both the paperwork and the tax calculation aspects.
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Zainab Ismail
I'm genuinely impressed by taxr.ai. After seeing the recommendation here, I decided to try it for my S-Corp dissolution. I uploaded our corporate bylaws, most recent tax returns, and financial statements, and it immediately identified three issues I hadn't considered. Most importantly, it caught that I needed to file Form 8832 because we had changed our accounting method two years ago. My accountant had missed this completely! The analysis saved me from what could have been a compliance nightmare as I close down the business. Definitely worth checking out if you're dissolving an S-Corp.
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Connor O'Neill
Has anyone here tried calling the IRS business line to get clarification on the S-Corp dissolution requirements? I've been trying for DAYS with no luck. Always "high call volume" and disconnects. Found this service called Claimyr at https://claimyr.com that supposedly gets you through to an IRS agent without the wait. There's a video demo at https://youtu.be/_kiP6q8DX5c showing how it works. Used it yesterday and got through to an agent in about 15 minutes who confirmed exactly what I needed to do for my S-Corp dissolution. No more spending hours listening to that awful hold music!
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Yara Nassar
•How does that even work? I thought everyone had to wait in the same IRS queue. Sounds like they're just selling basic info you could Google.
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Keisha Robinson
•Yeah right. The IRS is notorious for being unreachable. There's no way some third-party service can magically get you through. What's the catch? Are they charging like $100 for this "service"?
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Connor O'Neill
•It works by continuously calling and navigating the IRS phone tree for you until it finds an open line. Once it gets through, it calls you and connects you directly to the agent. You don't have to sit there redialing or waiting on hold - the system does it for you behind the scenes. No, they're not just selling Google info. The value is actually getting connected to a live IRS agent who can answer your specific questions about your business situation. When I got through, I was able to ask detailed questions about how to handle the final payroll returns and asset distribution for my specific S-Corp situation, which you definitely can't just Google accurately.
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Keisha Robinson
Well, I was completely wrong about Claimyr. I was so skeptical that I decided to try it just to prove it was a scam. I needed to ask about Form 966 filing requirements for my S-Corp dissolution. Figured I would waste 30 minutes and have nothing to show for it. To my complete shock, I got a call back in about 20 minutes and was connected directly to an IRS business tax specialist. She walked me through the entire dissolution process, confirmed exactly when to file Form 966, and explained how to properly document asset distributions to avoid red flags. I've been trying to get this information for weeks! Honestly don't know how they do it, but it worked.
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GalaxyGuardian
Don't forget about state-level dissolution requirements! I closed my S-Corp last year and the state tax obligations were actually more complicated than the federal ones. Had to get a tax clearance certificate before they would even process my dissolution paperwork. Every state is different, so make sure to check your state's specific requirements.
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Dmitry Popov
•Good point! I'm in Illinois - any idea what the specific requirements are here? Should I be contacting the state tax department separately?
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GalaxyGuardian
•For Illinois, you definitely need to get a tax clearance from the Illinois Department of Revenue before filing your Articles of Dissolution with the Secretary of State. You'll need to file Form CBS-1 (Application for Tax Clearance) with the IDOR, and they'll issue a Tax Clearance Certificate once they verify you don't have any outstanding tax liabilities. This process can take several weeks, so start it well before you plan to dissolve. Also, make sure your annual reports are up to date with the Secretary of State. Illinois can be particularly strict about having all state tax obligations settled before allowing dissolution, including sales tax, withholding, and unemployment insurance contributions if you had employees.
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Paolo Ricci
Has anyone used TurboTax Business to file their final S-Corp return? Wondering if it handles all the dissolution specifics properly or if I should use a CPA for the final year.
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Amina Toure
•I used TurboTax Business for my final S-Corp return last year and it was fine. It walks you through checking the "final return" box and all the dissolution-specific items. Just make sure you have good records of all asset distributions. The software can only work with what you input.
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Harper Collins
One thing I'd add is to make sure you handle any depreciation recapture properly when distributing those laptops to yourself. If you claimed depreciation on them over the years, you'll need to calculate the recapture amount and include it in your final tax calculations. The fair market value of the laptops when distributed minus their adjusted basis could result in ordinary income treatment for the depreciation portion. Also, since you mentioned this is your first business closure, consider keeping all your corporate records for at least 7 years after dissolution. The IRS can still audit closed corporations, and you'll want documentation of how you handled the final distributions, asset valuations, and dissolution process. Better to have the paperwork and not need it than the other way around!
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Effie Alexander
•Great point about the depreciation recapture! I hadn't thought about that aspect with the laptops. Since I've been depreciating them over the past few years, I'll need to calculate what the adjusted basis is versus their current fair market value. Do you know if there's a specific form or schedule where this gets reported on the final 1120-S, or does it just flow through the regular depreciation schedules? Also, thanks for the reminder about keeping records for 7 years. I was planning to scan everything and store it digitally, but wasn't sure how long the retention period was for dissolved corporations.
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