453 installment sale - when corp closes

[schirallicpa]

Maybe I'm just going around in circles - 

The SCorp Taxpayer sold assets in installment sale in 2021.  All of the 453 reporting and pass-thru worked fine. 

Now - the SCorp wants to close up and report a final return for 2022.  Will all of the rest of the installment need to be reported now in 2022?  But that seems unfair as the term of the note is 10 years. The shareholder should be able to continue the deferment over the term of the note.  But what are the mechanics of reporting that?  

Does the corporation need to stay "open" for the rest of the term?  I don't think it does, but may make my work easier.  

[Lee B]

This article in The Tax Advisor covers all of your options:

https://www.thetaxadviser.com/issues/2014/sep/tax-clinic-06.html

[schirallicpa]

1 hour ago, cbslee said:

This article in The Tax Advisor covers all of your options:

https://www.thetaxadviser.com/issues/2014/sep/tax-clinic-06.html

I think I'm going in bigger circles.......I'll have to revisit this on another day. 

[DANRVAN]

On 3/5/2023 at 10:54 AM, schirallicpa said:

he SCorp Taxpayer sold assets in installment sale in 2021.  All of the 453 reporting and pass-thru worked fine. 

Now - the SCorp wants to close up and report a final return for 2022.

 

 

On 3/5/2023 at 10:54 AM, schirallicpa said:

The shareholder should be able to continue the deferment over the term of the note.  But what are the mechanics of reporting that?  

 

Too late to do anything at this point unless the Corp wishes to recognize gain on the distribution of the installment note to the shareholder.

 

The distribution of the installment note to the shareholder is a taxable event to the S-Corp; unless they meet the exception under sect 453(h)(1).

 

In order to meet the 453(h)(1) exception, the corp. must adopt a plan of liquidation before the installment sale is closed.

 

Then there is a 12 month time period to compete the liquidation.