Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Closing a Sole Proprietorship, Corporation and Partnership
Sole Proprietorships
Closing a sole proprietorship when there are no employees involved and if no business property is sold, is fairly simple. Just file your final Schedule C to report any income and expenses for the final year of business. That's it.
The IRS doesn't require that you inform them it's your final Schedule C, nor are you required to attach a separate statement notifying the IRS of the closure. Note that, there is no place on Schedule C to indicate that it's your final Schedule C.
The only time you need to file Schedule C is when your business has either income or expenses in any tax year, or if you sell business property in any year after closing your business.
Corporations and Partnerships
If your business is unincorporated (i.e. a sole proprietorship), you generally don't incur the types of winding up expenses incurred by corporations and partnerships.
Corporations and partnerships generally incur legal and accounting fees to dissolve the corporation and close the partnership. For example, the books have to be closed, financial statements prepared, gains and losses determined, tax returns prepared and filed, final payments made to employees, and final distributions made to owners.
Corporations
If a corporation is closed:
You must file Form 966, Corporate Dissolution or Liquidation, if you adopt a resolution or plan to dissolve the corporation or liquidate any of its stock. Form 966 must be filed within 30 days after the plan or resolution of liquidation is adopted.
C corporation:
- File Form 1120, U.S. Corporate Income Tax Return, for the year you close the business.
- Remember to check the final return box (just below the name and address section on page 1)
- Report capital gains and losses on Schedule D (Form 1120).
- Form 1120 - Line E(2) is used to indicate it's a final return.
S corporation:
- File Form 1120-S, U.S. Income Tax Return for an S Corporation, for the year you close the business.
- Remember to check the final return box (just below the name and address section on page 1).
- Report capital gains and losses on Schedule D (Form 1120-S).
- Check the "final return" box on Schedule K-1, Shareholder's Share of Income, Deductions, Credits, Etc.
Regardless of the type of corporation, you may also need to file these forms when you file your Form 1120 or 1120-S:
- Form 4797, Sales of Business Property, for each year you sell or exchange property used in the business. You also need to file this form if closing your business causes the business use of an eligible property under Section 179 to drop to 50% or less.
- Form 8594, Asset Acquisition Statement, if you sell your business.
States:
You must also comply with your state's requirement for dissolving the corporation. A corporation must be formally terminated and state tax obligations must be up to date. It's not like a sole proprietorship, where you simply stop filing Schedule C and go on your merry way.
Contact your state's Corporation Commission (or whatever the appropriate agency is called in your state) to find out the procedures to follow.
Partnerships
If a partnership is closed:
- File Form 1065, U.S. Return of Partnership Income, for the year you close your business.
- Check the final return box (just below the name and address section on page 1).
- Check the fine K-1 box above Part III on Schedule K-1, Partner's Share of Income, Deductions, Credits, Etc.
- Report capital gains and losses on Schedule D (Form 1065).
You may also need to file these other forms with your Form 1065:
- Form 4797, Sales of Business Property, for each year your partnership sells or exchanges property used in the business. You also need to file this form if closing your business causes business use of an eligible property under Section 179 to drop to 50% or less.
- Form 8594, Asset Acquisition Statement, if you sell your business.