I have an S Corp. with only one asset that being a Semi. The Financing company took back the Semi and issued my Corp a 1099-A showing an outstanding principal balance of $73,986.56 and a fair market value of $44,769.74. The financing company eventually sold the vehicle and billed the shareholder personally for $29,216.92. The shareholder filed personal bankruptcy and the $29,216.92 debt was dismissed. My question is since the Corp was insolvent before and after the COD is anything taxable in the Corp. that would be passed to the shareholders? The basis of the Semi was $5,000 and the only other debt in the Corp. was owed to the shareholders.