Liquidating a small corporation
If you determine that liquidating your assets is your best course of action, follow these key steps.
I’m a CPA, and my best tax advice comes from you guys…NOT the Tax Adviser!
Use your industry contacts, including appropriate suppliers and competitors, to find buyers.
Competitors may also be interested in buying your intellectual property (trademarks, copyrights, and patents) and any works or jobs in progress, as well as your customer lists and company name or product names.
If you have decided to get out of business and are not able to pass your business on, merge it with another business, or sell it as a going concern, liquidating the assets could be the most appropriate exit strategy.
However, before you terminate your lease, sell a key piece of equipment, or disconnect your utilities, make sure you have a well thought-out plan.
Set aside any assets that you pledged as collateral for a debt or loan.
In particular, the directors and officers of an insolvent corporation or LLC (one whose assets are worth less than its liabilities) have a statutory duty to minimize losses to the company's creditors.
If Decedent and Daughter owned the S corporation 80-20, the death of the decedent provides the estate a step-up in basis on the estate’s 80% share.
The liquidation of the S corporation, even if it owned only land, triggers recognition of gain for Daughter.
If you have items that will be hard to sell, such as worn out equipment and office furniture, consider donating them to charity for a tax deduction.
As to accounts receiveable, don't forget that they will be much less valuable after you close.
You will also need this information for your tax returns.