How to dissolve an LLC and transfer assets?
I just moved states. From what I'm reading online, I have a few options, but the one I've decided to go with is to dissolve my LLC in the old state, and form a sole-proprietorship in the new one to avoid paying an $800 franchise tax each year (significant portion of my income from this business).
I'm looking around but having trouble finding resources to explain to me how to do this without the IRS getting all worked up. Any suggestions or resources for me?
1 Answer
Why would the IRS get all worked up? Was your LLC taxed as a corporation? If not - its a disregarded entity, and you just file two schedules C for that year: one with the business name of the LLC and the other without, with the DBA of the new business.
If it was a partnership, then you need to file a final 1065.
If your LLC was taxed as a corporation, then its a bigger issue: asset distribution is a deemed sale and the corp has to pay taxes on the gains.
Re the state - they usually require a form to cancel the LLC (don't know what's the old state, but look at their corporate/state secretary's website, you'll find it). If the LLC is taxed in the state - you'll need to file a final form for that too (e.g.: in California LLC's file their own tax returns).
Welcome to California.
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Well I have a federal tax ID number as an LLC, I guess I just need to get a new one for my sole-proprietorship. Also, I plan on filing under Subchapter S so yea, it will be as a disregarded entity. I guess that makes sense that I don't have to think about asset distribution, just keep an inventory for each business. – John Z 12 years ago
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You don't need a federal tax ID for your LLC or your sole proprietorship: both are reported under your SSN. If you got EIN for a bank account - IRS doesn't really care, you shouldn't have done any tax reporting with it (unless you have employees). Subchapter S is for corporations or LLC's taxed as corporations, not for sole proprietorships or disregarded entities. Be careful not to make stupid mistakes. Talk to a tax professional – Littleadv 12 years ago
