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    2 Replies Latest reply on Feb 24, 2009 6:30 AM by Ceephus

    LLC - Change tax from sole propriertorship to S-Corp

    Ceephus Newbie
      I changed my LLC which had be filing as a sole proprietorship Sch C to a S-Corp (Form 2553 Election by a small Business Corporation). How do I determine the value of my assets on Schedule L of the 1120S?

      I had depreciated my equipment & furniture & fixtures on Sch C. Do I record my assets on Sch L on the 1120S at the net amount per my old Sch C depreciation schedule or do I record them at FMV at the time of Election of S-Corp?
        • Re: LLC - Change tax from sole propriertorship to S-Corp
          dublincpa Scout

          The value is what you could sell the assets for including goodwill on the date of the conversion.

          That is not what you would get in a liquidation, but if I were to buy your business that day, what would I pay you?

          Fixed assets might go for more or less than book value. Those could be built in gains or losses.

          I pray to the tax gods that there is no real estate in the new S Corp.

          If you are cash basis, do you have unrealized receivables that won't be counted in income until cash is collected? Those are built in gains.

          If you are accrual, but haven't written off bad debts, those are built in losses.

          If the business name would allow you to sell for more than the sum of the assets, that is goodwill, a built in gain. If you have any purchased goodwill, that could be a gain or loss.

          However, payables and debt get subtracted out.

          Feel free to contact me for help. This is not a simple task. Where is your accountant on all this? Good luck.
            • Re: LLC - Change tax from sole propriertorship to S-Corp
              Ceephus Newbie
              I was concern that I would be double dipping if I recorded my assets at FMV at the time of conversion when I fully depreciated some assets on Sch C depreciation.

              My accountant told me the value would be the FMV at the time of conversion. I was seeking a second opinion and that is why I posted this question. I was hoping other accountants like yourself would reply to my question.

              In a effort to reduce cost, I gave up my building rental and now operate my business from my basement (1100 sq ft). I was able to take in-home business expense on Sch C, will I still be able to take in-home business expense on 1120S?