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  • 1.  Deceased sole S-Corp shareholder

    Posted 03-30-2022 10:44 AM
    Good morning to my distinguished colleagues. Hopefully you are all managing alright.
    I have a deceased taxpayer of a small s-corp.
    1. He had not filed p/r or corp tax returns for many years but finally filed, let the business close out and closed the bank account. But there were 5-7 years of late filed 1120-Ss and probably significant late filing shareholder penalties stacked up.
    2. Is my understanding correct that the most aggressive action by IRS would be to seek to collect from the now defunct corp. (with a 10 year collection statute)? 
    3. The Executor and Estate Attorney are both asking for a authoritative cite that the IRS can merely send reminder collection notices to the corp. Further, similar to the Executor's liability for unpaid tax, is there any chance IRS would bring the Executor liability (I doubt it) into this for penalties? The Estate attorney is holding escrow awaiting an answer. I was unable to find authoritative info - both on IRSs site and general internet surfing. I've tried calling ACS directly all hours - early 7:45p.m. - can't get through.
    Any help and thoughts with this would be abundantly appreciated.

    Andrew Demsky
    Andrew C. Demsky, CPA
    North Bellmore NY

  • 2.  RE: Deceased sole S-Corp shareholder

    Silver Most Valuable Member
    Posted 03-31-2022 12:21 PM
    The problem arises under Section 6901 which imposes transferee liability upon Executors and Trustees.  The analysis can be very complex and if the Decedent was timely assessed the Executor may have liability if the collection statute of limitations is open.

    Robert Barnett
    CPA, ESQ.
    Capell Barnett Matalon & Schoenfeld LLP
    Syosset NY

Discussion Disclaimer

The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.