If the reality of entrepreneurship differed from the dream, you might be thinking of wrapping up your business venture and pursuing other opportunities. As you're assessing the legal and operational aspects of closing your business, take time to consider the tax implications.

Here are two:

1. Plan ahead to benefit from carryovers and other deductions.

Did you operate your business as an S corporation? Be sure to check your basis before filing a final return. Losses you were unable to claim in prior years - called "suspended losses" - are of no value to you after liquidation. If possible, consider increasing basis by making capital contributions or loans to your company.

Also review prior-year returns for carryovers affecting the current year, such as credits you claimed that may need to be recaptured.

2. File final tax returns.

Are you closing your business midyear? Watch out for due dates that differ from the norm. For instance, when you terminate a partnership, a short-year Form 1065 must be filed within four-and-a-half months of the date of closing.

In addition to federal and state income tax forms, you may need to submit final payroll, sales, tangible, and excise tax returns, as well as pension or profit-sharing plan reports.

Additional filings may also be required, such as Form 966 (Corporate Dissolution or Liquidation) or Form 8594 (Asset Acquisition Statement). Closing your business involves tough decisions. We're here to help ease the stress. Give us a call for checklists, advice, and tax-minimizing exit strategies.

Contact Jim Komos of Ciuni & Panichi at 216.831.7171 or jkomos@cp-advisors.com if you would like additional information on taxes and your business.

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