S Corp closed 2021 and expenses incurred 2022

Forum|Forum|3 years ago
April 1, 2023
1 reply
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We closed our S Corp in 2021 and the final return for 2021 was filed in 2022. We incurred expenses in 2022 from our accountant for assistance in the dissolution of the company and for services in connection with the preparation of our final 1120S for 2021, filed in 2022. Can those expenses be deducted on our personal tax return for 2022 and, if so, where?

Thank you!

PatriciaV

Employee

Yes, you can report these expenses on Schedule C in the year after you filed the final business return.

Per ColeenD3:

From the Bradford Tax Institute

In the instant case, expenses represented by the debts would have been deductible under section 162 of the Code had they been paid by the taxpayer while he was still carrying on the business. The fact that the business has been discontinued does not prevent the deduction of expenses otherwise allowable to an individual taxpayer using the cash receipts and disbursements method of accounting. See Waters F. Burrows v. Commissioner,38 B.T.A. 236 (1938), acquiescence, C.B. 1938-2, 5.

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vb1983Author

Thank you! I was thinking it might need to be done on Schedule E, since the business was an S Corp, but is it Schedule C since the business was in fact closed and the expense became a personal business expense? I appreciate your response.