The annual tax return for a partnership, corporation, S corporation, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business ceases to exist, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1.

You will also need to file returns to report disposing of business property, reporting the exchange of like-kind property, and/or changing the form of your business. If you do not have a pre-printed envelope in which to send your taxes, refer to the Where To File page for a list of addresses. Below is a list of typical actions to take when closing a business, depending on your type of business structure:

Checklist

• Make final federal tax deposits
  • Electronic Federal Tax Paying System (EFTPS)
    OR
  • Form 8109-B
• File final quarterly or annual employment tax form.
  • Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (PDF)
  • Form 941, Employer’s Quarterly Federal Tax Return (PDF)
  • Form 943, Employer’s Annual Tax Return for Agricultural Employees (PDF)
  • Form 943-A, Agricultural Employer’s Record of Federal Tax Liability (PDF)
• Issue final wage and withholding information to employees
  • Form W-2, Wage and Tax Statement (PDF)
• Report information from W-2s issued.
  • Form W-3, Transmittal of Income and Tax Statements (PDF)
• File final tip income and allocated tips information return.
  • Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips (PDF)
• Report capital gains or losses.
  • Form 1040, U.S. Individual Income Tax Return (PDF)
  • Form 1065, U.S. Partnership Return of Income (PDF)
  • Form 1120 (Schedule D), Capital Gains and Losses (PDF)
• Report partner’s/shareholder’s shares.
  • Form 1065 (Schedule K-1), Partner’s Share of Income, Credits, Deductions, etc. (PDF)
  • Form 1120S (Schedule K-1), Shareholder’s Share of Income, Credits, Deductions, etc. (PDF)
• File final employee pension/benefit plan.
  • Form 5500, Annual Return/Report of Employee Benefit Plan (PDF)
• Issue payment information to sub-contractors.
  • Form 1099-MISC, Miscellaneous Income (PDF)
• Report information from 1099s issued.
  • Form 1096, Annual Summary and Transmittal of U.S. Information Returns (PDF)
• Report corporate dissolution or liquidation.
  • Form 966, Corporate Dissolution or Liquidation (PDF)
• Consider allowing S corporation election to terminate.
  • Form 1120S, Instructions (PDF)

• Report business asset sales.
  • Form 8594, Asset Acquisition Statement (PDF)

• Report the sale or exchange of property used in your trade or business.
  • Form 4797, Sales of Business Property (PDF)

What’s more, the maximum deduction is increasing to 9% of qualified production activity income (QPAI) in 2010. If your company is in the top 34% tax bracket, this effectively amounts to a 3.15% tax cut.

Here’s some background information. Under Section 199 of the tax code, a qualified domestic producer can currently deduct 6% of the lesser of its QPAI or its taxable income. The maximum deduction was initially doubled from 3% after 2006.

Production activities must be performed in whole, or in significant part, on U.S. soil. The annual deduction is limited to 50% of the W-2 wages.

Obviously, the deduction is fair game for traditional manufacturers of goods, but it also applies to farmers, fishermen, miners and a variety of businesses in the construction field. In fact, IRS regulations single out construction activities for special treatment. For instance, a qualified company doesn’t actually have to construct buildings. The deduction may be extended to certain taxpayers in the business of painting, drywalling and landscaping.

Similarly, the deduction is generally available to engineers and architects. As long as the services are related to construction, the costs qualify for the deduction, even if no actual construction takes place. The deduction may also be claimed by businesses conducting feasibility and environmental impact studies.

Depending on your situation, you may want to modify your business operation to qualify for the increased deduction in 2010. Don’t make any snap judgments if your business operation appears to fall outside the scope of a traditional manufacturing activity. We can make a definitive assessment of your situation. Please do not hesitate to call us and schedule a meeting for this purpose.

• Sole Proprietorships
• Partnerships
• Corporations
• S Corporations
• Limited Liability Company (LLC)

For additional information, refer to Small Business Administration’s Choose A Structure webpage.