Accounting after LLC taxed as C-corp election
We just changed our LLC to be taxed as a C-corp using form 8832 for the tax year 2009 and I have a few questions:
1. Since we did not distribute all the money in the bank account to members in 2008, and in 2009 the LLC is taxed as a C-corp what do we do with the 2008 money now? Can we do one of the following:
(a) Write checks to members now, in 2009, and just tell the 2009 accountant that those transactions were for 2008 distributions when the company was an pass-thru LLC?
(b) Reclassify all the 2008 remaining money as a liability, like "Loan From Members" or something, and then clear it out when we get around to making payments - which are in fact delayed 2008 member distributions?
2. I guess the bigger question is - when an LLC changes to C-corp taxation, do all the libiabilities have be zeroed out? credit card bills, etc. If they are not paid out, then are booked as "accrued expenses" on 1/1/2009?
Thanks in advance for your help