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We're in the process of exploring dissolving our Delaware C Corporation and are wondering about the costs. The business has outstanding loans due to the two main shareholders which cannot be repaid. They recognize that the business has failed and understand if we choose to dissolve the company. What potential taxes would the corporation and its owners bear in this case?
ANSWER
Expert Stephen Bonick's Answer:
The write off of the loan could produce income (cancellation of indebtedness). The amount of tax would be the applicable corporate rate * the net income of the corp (which in this case should be whatever net results from the loan write off.
Stephen Bonick, CPA
