Big capital loss and make company inactive?

Hi, asking a question for a friend:

her company (c corp in new york) has big capital loss, she plans to retire so wants to shut down the company, but that will "waste" the capital loss, so the questions are:

  1. is there a way to make use of the capital loss, any financial instrument or something like that?
  2. if no, what about if she makes the company inactive, just hold some stocks and hopefully the stocks will appreciate in value thus offset by the captital loss
  3. is there annual cost of an inactive company? does she need to file tax (and pay high CPA fee) annually still? thank you very much!

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Reply to
ns66ns
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She can take everything out of the company except the capital loss, and then see if any profitable company (one with a capital gain) wants to merge with it to save on taxes. Seth

Reply to
Seth

I've been informed that it isn't quite that easy any more; the IRS has to believe that the merged company will continue to carry on the business of the merger partner with the loss. Seth

Reply to
Seth

As long as the corp exists, not liqidated, it needs to file Fed & state tax returns each year. There will be a state franchise tax to pay. As an inactive corp, the tax preparation fees would likely be lower. Would have to look at the facts & cirucmstances to see if liquitdating would provide a capital loss to the shareholder(s). ___________________________________

-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA

In New York, you can file a final franchise tax return, then your corporation can remain alive but inactive and pay no tax (other than the biennial department of state form which costs $9) for two years before the state dissolves it. If during those two years you want to reactivate the corporation, you can retroactively amend your return to make it not final. This two year grace period is new, effective in 2006. Alternatively, you can keep your corp active by filing an annual franchise tax form and paying the $100/yr minimum. If you have no income and no expenses, I would expect the federal 1120-S (two pages) and state CT-4 (four pages) would be simple enough that you could fill them out yourself. Regards, John Levine, snipped-for-privacy@iecc.com, Primary Perpetrator of "The Internet for Dummies", Information Superhighwayman wanna-be,

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Reply to
John L

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