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Can the losses of an s-corp be carried over in our personal taxes even if our s-corp shuts down?

Houston, TX |

We are considering closing our s-corp after a rough personal year where no business was in essence conducted. What are the legal ramifications to consider in closing down? What are the tax consequences? We have a significant loss to carry forward, so is it better to keep the company operational and pay the min. corporation fee in CA of $800 and continue operating when our five-year old business is still operating at a loss; will we lose the ability to deduct our losses on our personal returns if we shut down? We have moved to TX, but continue to hold our California corporation. Would it be wiser to close down this corporation and, should business look better, begin anew in TX with an LLC, or is the five-years in business (at a loss, mind you) an important consideration. My husband and I can't agree....

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Attorney answers 1


The winding down of a corporation encompasses paying the tax liability; however, if a new corporation i.e an LLC assumes the liabilities of the old S-Corp then you should be ok.

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