Sole prop then incorporated - which form(s) to file?

Yes. Sole Prop through July and then the corporation take over.

-- Phil Marti Clarksburg, MD

Your sole proprietorship would be reported on Schedule C "Profit or Loss From Business". As an employee of the corporation, which files its own return (1120), you'd report income, received as wages, on the Wages line of your personal tax return. If the Corporation were to issue dividends, they would be reported as such on your personal tax return. The C Corporation would file Form 1120 to report its income, expense, and tax (if any).. A "short year" would be reported on March 15th,

2007. If you have a tax year, other than that which begins on 1/1 and ends on 12/31, your return would be due on the 15th day of the third month after the end of your tax year. If you were to be filing as an S-Corporation, the above guidance would be somewhat different!!!-:)

Both. You will attach a Schedule C to your form 1040 for the

1st 7 months of the year and your corporation will file a form 1120 for it's first year of operations beginning on August 1. I strongly urge you to consult with a local tax professional who specializes in small business tax issues.

I assume you kept proper books for the 7 months you were operating as a proprietorship so no problem there. But when the corporation was formed, did you do what is necessary to transfer property, purchase stock, have a first meeting, elect officers, etc? There are times we've seen where a person gets an attorney to form a corporation, but that is all that is done. The corporation must have a proper set of books. Talk with your attorney first and your accountant, next. Or if you dont' have an accountant, hire one. ChEAr$, Harlan Lunsford, EA n LA

wrote

Both. Schedule C for the first 7 months, and a corporate return for the last 5 months. Now, if you elected "S" status, file 1120S, if not, use the regular 1120 or 1120A.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Both, Schedule C for the period from Jan 1 through the date of incorporation and a 1120 for the period between the date of incorporation and the end of the year. There will be certain items carried over from one business entity to the other, so you should get professional help.

Been there, done that.

-- Vic Roberts Replace xxx with vdr in e-mail address.

You will need to file as a sole prop (Form 1040 Schedule C) for all operations as a sole proprietor during 2006. You will also have to file a corporate tax return (Form 1120 if C corp) for all operations as a corporation during 2006. Therefore you will have BOTH a Sch C and a corporate tax return for 2006. The corporation will begin on August 1. The sole prop will end when operations are completed. I know these were not part of your original question, but your question makes me wonder if you have thought about the following- Are you a C corp or an S corp? Did you open a new bank account for the corporation? Don't forget that you will need to do payroll for the corporation. How to move any capital assets used in the sole prop over to the corp?

You may need a local tax advisor to assist you with these and other issues involved in the conversion.

-- Charles M. Shanes, CPA Charles M. Shanes CPA, LLC Richmond, VA QuickBooks ProAdvisor Microsoft MPAN Member for SBA

snipped-for-privacy@-Delete-This-Nospam-shanescpa.com

It isn't that simple. You must file two returns but not necessarily two for 2006. You file as a sole proprietor, on Schedule C, for the 7 months prior to incorporation. Everything after that must be reported on the corporation's return. However, the corporation does not have to adopt a calendar year, unless you elect S corporation status. A corporation can establish any fiscal year it chooses. The only requirements are that the year must end at the end of the chosen month or on a day of the week that bears a specific relation to the end of the month (i.e. the last Saturday of the month or the Saturday nearest the end of the money.) The corporation makes the election by filing a timely return for the chosen period. Timely returns are filed by the 15th day of the third month following the close of the year. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

Yep, C corp, calendar year, bank account, property transfer and books... Thank you all for your prompt answers!

-- jeff

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