| • I was a franchisee who lost the business to an aggressive franchisor. Civil/criminal issues aside (I had, and still have, no money to pursue charges legally), the franchisor took all my assets on premises --equipment, office supplies, everything. I am planning to claim them on my tax return as a theft. Does this seem reasonable?====>>>>>>>>>I guess it depends on the situation;as you can see, Theft losses happen when someone takes your money or property and intends to deprive you of it. To qualify as a theft for tax purposes, the event must be illegal under your state's laws.
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How should the building, amortization, equipment, depreciation, etc. be reflected on the return, since nothing is in my possession now and no monies were received for anything, including no return of landlord deposits?==========>>>>>>>>>>it also depends ; asalongas it is acceptable as deductible theft/loss expenses. You need proof to support taking a deduction. You should be able to explain or show:The type of casualty, and the date it happened. If it is acceptable, then, you need to report your casualty and theft losses by completing Form 4684 and Form 4797. These forms relate to sales of business property. If you're not required to file Form 4797, then you add the amount of your loss on your tax return on the proper line.
• The franchise offered services and people paid in advance, which meant a significant amount of unearned revenue liability remained on my books. Even though the franchisor seized the business, they refused to formally accept the liability of the unearned revenue and service obligation to the customers (although they have been providing the service to the customers). This means to me my business remains liable for unearned revenue in perpetuity and technically owes customers refunds. Unfortunately there is (was) no money available for refunds. So the company could be sued at any time by any and all of the customers. How should this be reflected on the return/balance sheet?========>>>>>>>>>>>> as you accurately pointed out , my business remains liable for unearned revenue in perpetuity and technically owes customers refunds”, The balance sheet presents the financial position of the company to financial statement users. Since the company considers unearned revenue as a liability, it appears in the liabilities section of the balance sheet. When the company delivers all or a portion of the product or service to the customer, it reduces the balance owed to the customer. The amount earned through the delivery of the product or service represents earned income, which the company reports on the income statement. The remaining balance of unearned revenue appears on the balance sheet.
This is more of a side-note. I filed chapter 7 (personal bankruptcy) and it was discharged in 2013, thankfully relieving me of much of the financial debt incurred both by the business and personally=======>>>>>>>>>>>>>>>you as a shareholder don't have to be notified of a Chapter 7 filing because you usually don't receive anything in returnyou’re your investment. If creditors are paid in full, the court will notify you and give you a chance to file claims to whatever is left over.It makes no difference if you've made an "S" election for your corp. Such an election is a matter of tax law. For purposes of the bankruptcy laws, an "S" corp is treated no differently than a "C" corp. But any taxable income generated by an "S" corporation after bankruptcy may still be taxable to the shareholders, as the corporation isn't a taxpaying entity. A corporate bankruptcy shouldn't directly affect the shareholders. If the officers or shareholders are personally liable for the debts of the business, the automatic stay in the corporation's case doesn't prevent creditors from trying to collect from others who may be liable.
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