closing s corp, shareholders only husband and wife. Business loss.
after closing, is there any tax liability on sale of equipment?

“Business loss. after closing, is there any tax liability on sale of equipment?”------>I feel sorry for that. I guess a variety of legal and accounting issues occur when an S-corp election is terminated. Cash ( if you have) plus FMV of the equipment is the amount of distribution to employees shareholders. In general, the FMV must be lower than the original cost of the equipment, no gain is recognized. The corp will do a liquidation. If the only remaining asset is the equipment, it will be distributed to the shareholder as it ‘d be sold for its fair market value and then the cash ‘d be distributed. There will not be anything on the K-1 that is specific to the negative retained earnings. However, the sale of the equipment should be included and the gain or loss on that transaction will be included on the K-1 as well. If you have income from the corporation in the tax year, your K-1 would reflect that income and you would use this form to prepare your personal tax return.