| | mid-year business owner change help!
I am trying to figure out how I prepare w2s and file taxes....
The company was "sold" between father and son august 2014 for $0.00 so I'm not sure if it can be considered sold... basically the NOL was so high for several years the IRS said we are technically a hobby.... so there was no money exchange since the company had negative equity.
The new owner/son applied for an LLC (single member), applied for a new EIN, State ID, Sales Tax ID, EVERYTHING. So it technically wasn't a sale, it was ending one business and starting a new one. So how do I do taxes?
Already prepared W2 for the new owner up to his last payday as an employee and recorded all member draws from the date his business started. Both new and old owner, to my understanding, will just file a 1040 with Schedule C since a single member LLC and Sole Proprietorship are both considered disregarded entities. We did not choose the S Corp election since the financial situation isn't ideal.
I have recorded all member draws for the old business owner up to him retiring/selling(?) his business. I know he needs to file a 1040/Sched C and include his member draws/social security income but does he claim the NOL for the time he ran the business? Or can the new owner carry over the previous company's loss as well as the loss for the second half of the tax year???
I am trying to do what is best for BOTH parties as they are relatives. But ultimately, what's best for the new business if we must choose.
I will be hiring a tax professional, but I really need an opinion because I have gotten so many different instructions even from different CPAs and tax professional offices.. I tried researching but these tax laws and instructions are so convoluted!!