Deductions for defunct S corporation expenses

Let’s say you closed your S corporation in 2016.

Let’s also assume that you incurred unexpected expenses from your defunct S corporation in 2017 and 2018.

Finally, let’s stipulate that you personally paid for them as the S corporation’s president and sole shareholder.

Now comes the big question… Can you deduct those expenses?

Now comes the big answer… Nope. You’re out of luck.

You’ll find out why when you read my new article titled Q&A: Deduction for Defunct S Corporation Expenses?

Three ways our fact-filled article can help you:

1. We’ll explain why there’s no deduction for your S corporation. The law is clear. When it comes to Section 162 business expenses, your payment on behalf of your S corporation does not, by itself, create a deductible expense. Why?  Because you didn’t incur the expense. The no-longer-in-existence S corporation did. You’ll get the whole story when you read the full article.
2. You’ll learn why the owner of the S corporation is a loser too. Sorry, but you can’t deduct the expenses personally since you didn’t incur them in your trade or business. You also can’t deduct the expenses for the production of income since the S corporation produced no income for you. You’ll get the details when you read the full article.
3. We’ll tell you how you could have handled the situation better. If you had left the S corporation open with some cash available, your S corporation could have paid and deducted the expenses and passed on the tax-deduction benefits to you via the K-1. We’ll explain this fully when you read the full article.