I have a S-corp client that has closed their business during 2009. They sold all remaining inventory and business assets. Therefore, all that was left on the books at year-end was approximately $100 in the bank account and all the credit card debts. There are no secured debts. I started working on the "final" tax return when the client informed me that she had filed bankruptcy personally as well as for the corporation. Since all business activities have ceased, can I file a final tax return for 2009? Or will the corp have to keep filing tax returns until the bankruptcy is discharged?
Also-the corp has a substantial loss for the year; does the bankruptcy affect the ability to deduct the loss on her personal return?
Sorry for such a basic question--this is my first client to file bankruptcy...unfortunately I believe others aren't far from filing as well.
