The new federal BOI reporting requirement has prompted an increase in dissolutions as business owners and investors are cleaning out entities they no longer use so that they will not have to complete the new BOI filing on these entities starting in 2024. The end of the year is an excellent time to consider whether you should dissolve an unused business entity. This is particularly important as we head into 2024 where LLCs and Corporations will be required to file a Business Ownership Information report with FinCEN identifying those persons who own 25% or more or who have substantial control in an entity. Failure to file a BOI report on an LLC or corporation will result in financial and criminal penalties. If you are a business owner or investor you need to analyze your entity structures and don’t forget the companies you may have left behind. Perhaps you have an LLC that once owned a rental property or an s-corporation that once operated a business. If there are no operations or assets in your entity and there is no intention to place new business or assets in the entity, then you should dissolve your entity. While there are some exceptions to the BOI filing for “inactive” entities established before January 1, 2020, we think it is best to clearly dissolve unused entities so that there is no question or requirement later on to prove that you meet the exception with FinCEN.


Dissolution is the legal method of closing an entity and its registration with the state. Following dissolution, the entity is no longer active with the state and you cannot operate a business in the company name. Besides avoiding the new BOI requirement, there are a number of reasons to dissolve an inactive entity. First, dissolution will end annual on-going fees that are charged by the state. Second, dissolution and the filing of a final tax return (where applicable) for the company will end on-gong tax return reporting. This is of particular benefit to corporations and partnership LLCs as they are all required to file annual tax returns. And for single member LLCs we are now recommending that you send a letter to the IRS with your EIN stating that the LLC was dissolved so that the federal government is also notified of the dissolution and so that your EIN won’t get cross referenced with FinCEN. If the company ends up being dissolved after January 1st then you may end up being required to file a 2024 tax return for the company and may also be subject to 2024 state fees. And, if you don’t get it dissolved in 2024 you’ll have to comply with the new FinCEN BOI reporting requirements.


If a claim or lawsuit is later filed against the dissolved entity, the corporate veil will still be available to protect the business owner’s personal assets from the business so long as the liability arose when the entity was in good standing. As a result, owners of a dissolved entity still receive liability protection from the company for liabilities that occurred when the entity was active and registered even if a lawsuit is brought later on when the entity has been dissolved.

A proper dissolution requires a filing with the state of organization/incorporation as well as the drafting or company minutes documenting the dissolution and wind down of the company. It also includes notifying the IRS whether that is on a final return or by letter. And lastly, you’ll want to close out any bank or merchant accounts associated with the entity. Remember, you will also want to inform your accountant as to the dissolution to insure that proper tax reporting is handled on your tax returns. Our law firm, KKOS Lawyers, can help get your entity dissolved properly in all 50 states and can also assist with your BOI compliance for on-going entities.

By: Mat Sorensen, Partner KKOS Lawyers and CEO Directed IRA & Directed Trust Company


Invested in Crypto? Here’s Everything You Need To Know About This Year’s Tax Rules

The IRS continues to issue updated guidance on all things crypto. We help you make sense of it.

When you buy  and sell it for a profit, you are subject to capital-gains taxes. This is the case whether you buy Bitcoin and sell it for dollars or whether you exchange it for other cryptocurrencies for a profit. This is also the case if you buy Bitcoin, it goes up in value and then you exchange the Bitcoin for goods or services.

The IRS has given guidance twice on cryptocurrency tax issues in IRS Revenue Ruling 2014-21 and 2019-24. The critical determination by the IRS in 2014 was that cryptocurrency is property, not currency, for federal tax purposes. This critical determination meant that crypto-trading profits will be treated similar to stock-trading profits, as stock and crypto are both considered property for tax purposes.

Visit Entrepreneur to read my full article. 



Note: This is an update of a piece published in March 2021 that reflects new guidance administered by the  over the subsequent year.



The IRS is Coming for Your Crypto. Here’s What You Need to Know.

Tax season is upon us, and if you’re unsure of how this affects your crypto wallet, then you need to see this.

Tax season is here, and if you’ve had any transactions related to crypto, there is a lot you need to know. Mark and I break down some vital information on our webinar about crypto and tax with Entrepreneur.

Watch “The IRS Is Coming for Your Crypto. Here’s What You Need to Know” at Entrepreneur.






New IRS 1099 Rule for PayPal and Venmo Targets Very Small Businesses and Will Cause Misreporting and Errors

FroMat Sorensen Entrepreneur Articlem my article on Entrepreneur

The IRS recently announced that payment apps such as PayPal, Venmo, and CashApp will be required to issue 1099s to small businesses and self-employed persons. Here’s what you need to know.

New rule is targeted at very small businesses and individuals with a side hustle

Starting in tax year 2022, payment apps will be required to report to the IRS total payments received by a business account in excess of $600 annually. This new requirement is clearly targeted at the smallest of small businesses and at individuals with a side hustle, as the prior rule only required a payment app to report when an account received more than $20,000 and had 200 or more transactions within the year. These micro-businesses that collect less than $20,000 a year previously did not fall under the 1099 rule, but will now be treated like every other business, large or small…

Read the article on Entrepreneur here.

Non-Wealthy IRA Savers Who Invested IRAs Into Small Business, Startups and Real Estate LLCs Targeted in ‘Build Back Better’ Plan

Non-Wealthy IRA Savers From my article on Entrepreneur

The proposed $3.5 trillion budget-reconciliation package still working its way through Congress contains two provisions that will restrict IRA investments into startups, small businesses, and real estate LLCs. These provisions came as a surprise to the over one million IRA investors who already invest a portion of their IRA into these non-publicly traded assets. The problematic sections, 138312 and 138314, change more than 40 years of IRA laws and practice, which have allowed IRAs to invest into publicly traded companies as well as privately held small businesses, LLCs, real estate, and startups…

Read the article on Entrepreneur here.

PPP Loan Forgiveness Period Beginning to Close; Payments May Be Due

PPP Loan Forgiveness Period Beginning to Close; Payments May Be DueFrom my article on Entrepreneur

Small-business owners who obtained a Paycheck Protection Program (PPP) loan in 2020 need to pay close attention to their forgiveness period, as the window of time to avoid  of principal and interest is closing. For example, if you obtained a PPP loan on April 15, 2020, and took the maximum coverage period of 24 weeks, you will have until this August 30 to apply for forgiveness. If you fail to apply for forgiveness in time, you will be responsible for monthly interest and principal loan payments…

Read the article on Entrepreneur here.