Taxes and Corp Bankruptcy .
I have a friend considering filing Chapt 7 for his corp. He has certain
withholding taxes which remain unpaid. I know that taxes are not
dischargable, but can the corp. portion of FICA/MCare be avoided. Also,
will bankruptcy avoid penalties and interest?
Your friend needs to seek legal counsel immediately, because he's likely
personally facing the responsible person penalties under the IRC for
failure to deposit trust fund monies. He definitely needs to make the
attorney handling the bankruptcy aware of these outstanding issues
There are other issues - the pay off of debt isn't a deduction, but the
administrative costs associated with the bankruptcy (trustee fees, atty
for trustee, broker's fees, etc.) are deductible expenses. The trustee
should file the tax return, if he/she liquidated the corp.