Tax Question: Help on Closing Down LLC

Question:  When a company decides to close and they have about $15,000 in inventory that the owners will keep, do the owners need to do anything special for their taxes other than their normal tax return?  The company is an LLC.

Answer:   The answer to your question depends on several factors.  It can be easy or hard to answer depending on how the entity was set up.  Is this a single member LLC?  Did the LLC file for the S election?  Is there a balance sheet with equity and liabilities?

Response:  This is a single member LLC with no liabilities.

Answer:  A single member LLC is treated as a disregarded entity for tax purposes.  Therefore, there is nothing special to do on the tax return.  However, the owners should officially close the company with the State of Michigan by filing Form 163, Notice of Change of Discontinuance.

IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.