Filing Chapter 7 and owning an S-Corp Business

[merlihin]

I formed an S-Corp about 2 years ago that I never used. About last June an individual sub-contracted my S-Corp to do work for him. The checks basically covered the business expenses and nothing more. The business is running at a slight loss.

On Schedule I Line 7, what do I put here? I've never drawn a paycheck from the business. There is nothing left to draw. Is Line 7 only for Sole Proprietorship or Self-Employed people?

Does this also mean Schedule J Line 16 is dealt with in the same manner? Does it apply to S-Corps as well?

So really the question is, do I have to fill in these sections for an S-Corp?

[daylate]

In a similar situation, I just closed the S-Corps. Figured it was easier that way. In your case, on I it seems like you'd put the income and on schedule J you'd put the the expenses. net/net you will reflect the loss in that manner. Hopefully some others will chime in but this way seems to net out to what is really happening.

[HHM]

What sort of business operation are we talking about.

Here is the thing, unless we are talking about a mere shell of a company (no assets, no ongoing operation) why are you even contemplating filing BK without an attorney if you have an S-Corp?

But if this is your source of livelihood or income, you better get with an attorney if you want to be able to keep operating, trustees love to shut down business operations and they can.

[merlihin]

The business is just a company that does computer IT support for small businesses. We are not talking about a lot of money. Like maybe $5,000 gross since July 2010 - Dec. 2010. In my perfect world, I thought I would be able to get more clients to support and actually make a living. That did not happen. So since last July I've been using the money I cashed out of my 401(k) to live on and support my potential business. But ends are not being met and I now decided that it is best to just shut it down. I'm looking for a job.

If my business checking account is empty, and I don't have any income to show. What do I put on Schedules I and J? Are lines 7 & 16, respectively, applicable to S-Corps?

The trustee can shut down the business, the business is broke.

[tobee43]

however, if you have assets or signed loans or any agreements you may have to file the s corp separately. of course that will depend on what or how much the corp owes....

i did see one that the person file personal.....listed all creditors on the person and also filed a separate bk for the business and listed everything there as well....that way it was covered all over...however, the debt of that particular situation was over 400k in debt.

i really agree with hhm....i would see an atty and see what is suggested to safeguard you to the highest degree.

best of luck!