Company management, however, was blissfully unaware of this development and continued to file the business’s federal corporate income tax return and pay all federal income taxes.Eventually, company officers learned of their plight and reincorporated the business in the same state.It is not strange to deem an organization desolated and initiate the process of liquidation if the purpose of the company has been full filled.
When closing an LLC, it is essential to follow the dissolution process correctly to avoid liability for taxes and professional licensing fees -- and to protect your professional reputation.
In dissolving the limited liability company, or LLC, you will notify New Jersey state departments, pay remaining debts, close accounts, sell assets and distribute any remaining assets to the LLC's members.
Unless mentioned in the articles of association of the limited liability company, all shares of the deceased partner shall be duly transferred to the successors only if the limited liability company consists of more than one shareholder.
On the other hand, a single person company would dissolve due to the death of its only shareholder unless and until the successors declared their consent to resume the activities of the company within six months.
These rules (a) allocate the partnership’s income, losses, deductions, and credit among the partners and (b) adjust basis to reflect each partner’s allocation of those items.
As stated in Taxation of Limited Liability Companies and Partnerships, limited liability companies are taxed as partnerships by default.
A fine line exists between definitions of a corporate liquidation and dissolution.
But for tax purposes, the defining line can make a big difference.
Throughout the process, the LLC's operating agreement will be the guiding document. If there is an agreement in place, it may specify when and how the LLC may be closed, and how the assets should be distributed.
For example, the agreement may state that the decision to dissolve must be unanimous. If the LLC has more than one owner, there must be at least a majority agreement to close the company, unless otherwise specified in the agreement.
Make a written agreement to close the company, and have all the members sign the agreement.