Liquidating a Corporation and IRS Form 966
If you have a corporation that you have liquidated, or plan to liquidate, you need to be aware of the requirements of the IRS Form 966. Form 966 (“Corporate Dissolution or Liquidation”) must be filed by corporations (including for corporations filing Form 1120, 1120-L, 1120-IC-DISC, 1120S, and farmer’s cooperatives) if they have adopted a resolution or plan to dissolve the corporation, or to liquidate any of its corporate stock.
This article will explain the basics of Form 966; it is not intended to constitute tax or legal advice. Please consult an experienced tax attorney if you have further questions. Sherayzen Law Office, Ltd. can assist you in all of your tax and legal needs.
Filing Form 966
Under Internal Revenue Code Section 6043(a) and applicable regulations, Form 966 must be filed with the IRS center where the corporation or farmer’s cooperative filed its income tax return within 30 days after the resolution or plan is adopted to dissolve the corporation or liquidate any of its stock. If the original resolution or plan is amended or supplemented after Form 966 has been filed, required companies must file another Form 966 within 30 days after the amendment or supplement was adopted. The IRS notes that this additional form will be sufficient if the “[D]ate the earlier form was filed is entered on line 11 and a certified copy of the amendment or supplement is attached. Include all information required by Form 966 that was not given in the earlier form.”
Qualified subchapter S subsidiaries (see IRC Section 1361(b) (3) for definition and requirements) should not file Form 966. Instead, they should submit Form 8869 (“Qualified Subchapter S Subsidiary Election”). Likewise, exempt organizations should not file Form 966; these organizations will need to review the instructions for Form 990 (“Return of Organization Exempt From Income Tax”), or Form 990-PF (“Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation”). Additionally, in general, foreign corporations that are not required to file Form 1120-F (“U.S. Income Tax Return of a Foreign Corporation”), or any other type of U.S. tax return are not required to file Form 966.
Form 966 should also not be filed for a deemed liquidation (such as an IRC Section 338 election, or an election to be treated as a disregarded entity under IRS Regulations Section 301.7701-3).
Information Necessary for Form 966
In addition to the identifying information typically required on IRS forms (name of corporation, EIN, date of incorporation, etc.), various additional information is required to be reported on Form 966. For example, line 5 requests the type of liquidation a company has undertaken- partial or complete. On line 10, filers are required to specify the IRC Code Section under which the corporation is to be dissolved or liquidated; for instance, corporations that have completely or partially liquidated will enter “Section 331”, while a corporation completely liquidating a subsidiary corporation (that meets the requirements of section 332(b)) would enter “Section 332”. Information regarding any amendments to plans may be required on line 9 or 11, depending upon the circumstances involved.
Contact Sherayzen Law Office for Tax and Legal Advice With Respect to Liquidation of Your Corporation
If you are planning on liquidating your corporation, you should seek advice of a tax attorney. The experienced tax law firm of Sherayzen Law Office, Ltd. can help you with the entire process of liquidating the corporation with respect to both, legal and tax sides of this process. Contact Us for a Confidential Consultation!