Can Corporate shareholder has a $30k credit in his account. Corp is closing. Can S/H credit be transferred to personal tax return?

Corporate shareholder has a $30k credit in his account. Corp is closing. Can S/H credit be transferred to personal tax return?   Because he is non arms length I don't think I can use an ABIL. Thoughts??? Thanks

Answer

Nope,

The tax credit stay with the corporation . . . 

But it is possible to sell the corporation to a like type of business that would benefit by the tax credits - to wit, the shareholder or its representative or a business broker or a lawyer or schooled accountant negotiates a fee for purchasing the corporation from the shareholder to try to recover the cash value or tax benefit value of these tax credits arguably worth about $ 4,000 in 2015 and moving forward terms to an educated and interested or motivated buyer. 

The motivated purchaser would be the beneficial owner of these tax credits at that time to offset any corporate taxes they had to pay.

This may be to complex for the uninitiated tax preparer to discuss but an experienced or specialized tax preparer or accountant should know how to effectuate this transfer of ownership.

Failing this the current shareholder could retain the corporation with either hopes of transitioning the corporation to a third party in the future or to use it again in another like business venture in the next seven (7) years or the tax credit will die with either the wind-up of the corporation in the next seven (7) years or it will expire if the annual tax filings are not kept up.

Regards,

Doug Cumpson

Tax Specialist - Partner

GB Taxes & Accounting 

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