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How do I clear out Equity that was sold with the company when I took over the books?

I have a client who purchased a company and the books came as are mid year. He paid out the Equity that was in the company when he purchased the company but I am not sure who to make it a $0 balance.

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Re: How do I clear out Equity that was sold with the company when I took over the books?


@LucyB2 wrote:

I have a client who purchased a company and the books came as are mid year. He paid out the Equity that was in the company when he purchased the company but I am not sure who to make it a $0 balance.


If the company had equity accounts, then it is not taxed as a corporation

as a result, you can not buy the company and its books, the old company is closed and a final tax return prepared.

 

as the purchaser you start a new set of books for the new company.  You can NOT use the old set of books or its transactions.

 

I suggest getting with a tax accountant, especially since this a client you are advising.

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