| | Liquidation distribution to C corp shareholders
I am dissolving a C corporation and preparing the final tax return for tax year 2014. It has 4 shareholders, each owning 25% of the stock. Tax year begins 7/1/2014 and ends 6/30/2015. Total asset is under $250,000 so I had never reconciled Schedule L , M1 & M2 in previous tax years. Balance sheet has assets totaling $9,758.60, which is cash in bank. Common Stock is $25,000 and Retained Earnings a negative <$15,241.40>.
My questions are:
1. Can I only enter cash distribution amount $9,758 on Schedule K , Line 13 without reconciling the Schedule L Balance Sheet and M-1 and M-2 for the final year?
2. Can each shareholder recognizes $3,811 capital loss on their 2015 individual tax return, schedule D? Will they be challenged by IRS?
This is my first time using Ask Taxguru and hope someone there can help me. Thank you.