Watson CPA Group - Knowledgebase


Distributed Assets

Article ID: 389
Last updated: 24 Nov, 2018
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By Jason Watson ()
Posted November 23, 2018

When you revoke S corporation status, you will trigger a taxable event. A potentially big one. Upon revocation, assets are distributed to the S Corp shareholders at fair market value. Cash is easy. An automobile is generally not a big deal. But real estate can kick your butt. Therefore, before we put out the flame a review of the assets and fair market values must be done. To pay capital gains on appreciated assets when you have cash from a transaction is easy. To pay capital gains on appreciated assets when a cashless revocation occurs is brutal.

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