Form with which a corporation may resolve to alter its corporate status top that of a subchapter (S) corporation.
S Corporation With No Employees In Wake
State:
Multi-State
County:
Wake
Control #:
US-0046-CR
Format:
Word;
Rich Text
Instant download
Description
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FAQ
Because of the one-class-of-stock restriction, an S corporation cannot allocate losses or income to specific shareholders. Allocation of income and loss is governed by stock ownership, unlike partnerships or LLCs taxed as partnerships where the allocation can be set in the partnership agreement or operating agreement.
The S corporation allocates a loss and/or deduction item to the shareholder. In order for the shareholder to claim a loss, they need to demonstrate they have adequate stock and/or debt basis. The S corporation makes a non-dividend distribution to the shareholder.
File Articles of Dissolution Submit Articles of Dissolution with your state's Secretary of State office to officially terminate your S-corporation. The requirements and fees vary by state, so consult with your legal advisor to ensure proper handling. Notify the IRS and state tax authorities.
Additionally, an S Corp that loses its status as an S Corp will default to taxation as a C Corp on the day of the termination. This means the entity is subject to double taxation where the business' income is taxed at the corporate level and again at the individual level when dividends are distributed to shareholders.
