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Video instructions and help with filling out and completing Why Irs Form 966 Certified Copy Resolution

Instructions and Help about Why Irs Form 966 Certified Copy Resolution

Hi I'm Jeff Lovell a staff accountant with a a accounting and today we're going to talk about how to dissolve a corporation there are three main types of corporate dissolutions voluntary administrative and judicial this video is going to focus on voluntary disillusions by the shareholders shareholders can voluntarily dissolve the corporation by authorizing the disillusion filing a certificate or article of disillusion with the state Secretary of State's office filing IRS Form 966 and then winding down operations to authorize the dissolution a meeting of the board of directors is held at least two-thirds of the shareholders must vote in favor of the motion to dissolve the corporation the vote is recorded in the meeting minutes and a formal resolution is drafted for smaller corporations this entire process could be done in an attorney's office once the formal resolution is adopted it is written up and signed by both a corporate officer and by a representative of the shareholders which is then submitted along with an article of dissolution to the Secretary of State's office a copy of the Illinois version of this form is on the screen for a sample company called money pit on the screen here you have an example of the second page filled in for the same company and here you have a copy of IRS Form 966 filled in for that same company along with the IRS form a certified copy of the resolution of the corporate dissolution is sent or a plan for the liquidation of the corporation once these forms are filed the corporation can wind down its operations it should notify various state offices such as the Department of Revenue or the employment office and file any final tax returns by checking the box indicating it's the final return than paying any remaining tax debts for payroll sales tax income taxes it should notify creditors typically this is done directly or through a notice in the newspaper and then settle any outstanding claims if there are any remaining assets they can be distributed to the shareholders on a pro-rata basis at this time corporations distributing assets in liquidation to their shareholders can trigger double taxation let me give you an example suppose years ago some shareholders transfer land they paid $15,000 for to a corporation in exchange for its stock years later after the corporation has used the land to run its business the corporation is dissolved and the land is transferred back to the shareholders at the time the land is worth $75,000 it's grown in value by 60,000 for tax purposes this transfer of the land back to the shareholders is treated as a taxable sale and the corporation will pay tax on that $60,000 gain but the shareholders also have a game to recognize because they're treated as receiving land worth 75 thousand in exchange for their stock which is only worth 15,000 so they also have a $60,000 game to report on their tax return this double taxation doesn't occur for S corporations because S corporation shareholders get a step-up in basis when they receive the assets but if you're a shareholder in a C corporation that's about to be dissolved watch out if you have questions or need help why not call the accounting and tax experts at a accounting call us today to set up an appointment to discuss your situation we're here year-round to assist you and we look forward to hearing from you you.

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