Activity after Final Corporation Return is Filed

[SFA]

Just received papers from a Michigan client. Looks like he has continued using his corporation in 2015. He had directed us to file final returns for his s-corporation as of 12/31/2014. Now what?

Should I e-file an extension request to see if the IRS still recognizes his company and EIN? Not sure what will happen in Michigan. I don't want to create a Schedule C because some of the money he received were payments from clients that were written off as uncollectible by the corporation as well as new billings under the name of the s-corp. Of course no payroll returns were filed. He paid no wages to himself.

We must decide what to do by 3/15.

[rfassett]

For ease of mind - one way or the other - efile the extension now and see if it flies.  Not sure about Michigan - is their Corp deadline 03/15?  If so, can you also attempt to efile that extension?

Failing that, i.e., if the Corp has in fact been terminated, it makes sense that the uncollectible receivables were distributed to the shareholder at the end of 2014.  If the S-Corp was a cash basis taxpayer, your client would HAVE to put them (and any new activity) on a Schedule C.  Your options are pretty limited.

Be sure to keep at the fore front of your mind, that YOU did not create this debacle.

 

[SFA]

4 hours ago, rfassett said:

Be sure to keep at the fore front of your mind, that YOU did not create this debacle.

Thank you for that reminder. I called the client, and decided to return all his materials. The minor income was from new billings, and he is an attorney who should have known better. I did not e-file an extension. We have parted as friends. This one is not my monkey, not my circus.

[Terry D EA]

I think you made a very wise choice. For this very reason, and I'm sure you probably did, I never recommend completing the final return for at least two years to allow for winding up of business. I have heard of some folks not filing a final return at all for this very reason. Good you got out of this one.