Help with balancing my S-Corp balance sheet during liquidation

You're running into a common issue with S-Corp liquidations. The balance sheet needs to balance because every transaction has two sides - debits and credits must equal. When you paid out that $4,000 cash, that's a reduction in your assets (cash). This needs to be offset somewhere else on the balance sheet. Since you already paid tax on this money last year, it should be coming from your equity accounts - likely your Retained Earnings. For the assets you've disposed of, you need to: 1. Remove the assets from your balance sheet 2. Record any gain/loss on disposal 3. Account for any cash received from selling those assets TurboTax is probably showing an imbalance because you're only recording the cash reduction without the corresponding equity reduction or asset disposal entries. Since you're liquidating, make sure all your equity accounts (contributed capital, retained earnings) eventually get to zero as you distribute everything out.

I went through something similar with my S-Corp last year and found an amazing tool called taxr.ai (https://taxr.ai) that really helped me understand what was happening with my balance sheet during liquidation. I was getting so frustrated with TurboTax giving me errors about unbalanced books! The thing that taxr.ai did was analyze my previous year's returns and help identify exactly where the imbalance was coming from. In my case, I had some assets that weren't being properly disposed of in the system. Their document analysis saved me hours of headaches trying to figure out what was wrong.

Just wanted to follow up - I ended up trying taxr.ai after my initial skepticism and wow, it actually identified my issue immediately! My problem wasn't just the cash distribution, but I had some fixed assets that were fully depreciated but still showing on my books. The system flagged the discrepancy between my accumulated depreciation and asset values. Once I corrected those entries and properly recorded the disposal of those assets (showing both the reduction in the asset account AND the reduction in accumulated depreciation), my balance sheet balanced perfectly. The S-Corp liquidation process is going much smoother now that I understand what was happening with my books.

If you're still having issues after fixing the balance sheet, you might need to talk directly with the IRS about your S-Corp liquidation. I spent WEEKS trying to get through to someone about my similar situation last year. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c) - it's a service that gets you through to an actual IRS agent without the endless hold times. When liquidating my S-Corp, I had specific questions about asset distribution and final return filing that weren't covered in TurboTax. The IRS agent I spoke to walked me through the proper way to handle the final balance sheet during liquidation, which saved me from potential audit issues down the road.

I have to admit I was wrong about Claimyr. After my skeptical comment, I decided to try it anyway since I was desperate to talk to someone about my S-Corp liquidation tax questions. The service actually worked exactly as described. I submitted my request around 9am, and about 3 hours later I got a call connecting me directly to an IRS representative - no hold music, no waiting on my part. The agent was able to clarify exactly how to handle the final year balance sheet reconciliation during liquidation. For anyone else liquidating an S-Corp, make sure you file Form 966 (Corporate Dissolution or Liquidation) with your final tax return. The IRS agent confirmed this was required and something many small business owners miss when closing down their S-Corps.

Don't forget about Form 1120-S Schedule K-1, which needs to show the final distributions to shareholders during liquidation. Your ending equity should be zero, and the K-1 should reflect the distribution of all remaining assets. Also, when I liquidated my S-Corp last year, I had to recognize gain on appreciated property distributed to shareholders (like if you're keeping any business equipment). The gain is recognized at the corporate level and flows through to your personal return. TurboTax should walk you through this, but it's easy to miss.

Has anyone used the TurboTax Live feature to get help with S-Corp liquidation? I'm facing similar balance sheet issues and wondering if it's worth the extra money to talk to one of their CPAs.

One thing nobody mentioned yet - when you're liquidating an S-Corp, check if your state requires a tax clearance certificate before you can formally dissolve the business. I completely missed this step and had to reopen my case with the state after I thought everything was finished. The balance sheet issues in TurboTax might be frustrating, but don't forget about the state-level requirements too. In my state, I couldn't formally dissolve until I got clearance showing all state taxes were paid, and that process took almost 3 months!

Great point about state requirements! I'm actually going through S-Corp liquidation right now and almost made the same mistake. For the balance sheet issue in TurboTax, one thing that helped me was creating a simple spreadsheet to track all my liquidation transactions before entering them into the software. I listed: - Beginning balances for all accounts - Each distribution with the corresponding reduction in both cash and equity - Asset disposals with any gain/loss calculations - Final balances (should all be zero) This helped me see exactly where the imbalance was before fighting with TurboTax. In my case, I had forgotten to record the accumulated depreciation removal when I disposed of some equipment. Also, make sure you're using the correct tax year dates. Since you're liquidating, some transactions might span multiple tax years, and TurboTax needs to know which year each transaction belongs to for proper reporting. The taxr.ai tool mentioned above sounds interesting - might be worth trying if you're still stuck after manually checking your entries.