Our tax return was audited by the IRS for 2009 for a depreciation of assets that was claims in 2008 for a S Corporation, but was disallowed to be claimed in 2008 and was carried over to 2009. The S corporation was dissolved later in 2011. The statute of limitation for auditing 2008 has run already. We have told the IRS that the auditable amount of deprecation is a carry-over from 2008 and not occurred in 2009. The IRS now wants to see the 2008 return and details supporting the depreciation in 2008 (purchase receipts, bank statements...etc) Can IRS look into 2008 even though the statute of limitation for auditing 2008 has passed already. There is no fraud or wrong doing here, but if we cannot ask for a refund after 4 years, why should we let the IRS to look into our books?
An S corporation does not pay federal income taxes, instead passing its income, losses, deductions, and credits through to its shareholders.
Small business taxes include state and federal income taxes and employment taxes, self-employment taxes, and excise taxes.