Form 966 is the notice a corporation sends the IRS within 30 days after it adopts a resolution or plan to dissolve or to liquidate any of its stock. You mail it to the service center where the corporation files its income tax return, with a certified copy of the plan attached and an officer's signature.
Filing Form 966 opens the federal side of a corporate wind-down. The final Form 1120 or 1120-S, the liquidating distribution reporting on Form 1099-DIV, the last payroll returns and the letter that closes the IRS business account all follow from it. This guide walks through each step in the order a CPA firm usually handles them, using the current IRS form and instructions as of October 2026.
Form 966, Corporate Dissolution or Liquidation, is an information return required under section 6043(a) of the Internal Revenue Code. The statute says every corporation must file a return "[w]ithin 30 days after the adoption by the corporation of a resolution or plan for the dissolution of the corporation" or for the liquidation of all or part of its stock. The form tells the IRS that a final return and liquidating distributions are on the way.
The current version is the October 2016 revision, and the instructions are printed on the form itself (IRS Form 966 PDF). The IRS "About Form 966" page lists no recent developments, so the 2016 revision remains the one to use in 2026.
The form's instructions state that "A corporation (or a farmer's cooperative) must file Form 966 if it adopts a resolution or plan to dissolve the corporation or liquidate any of its stock." That covers both kinds of corporations. The IRS closing-a-business page groups the rule under "Corporation filing requirements (includes S corporations)" (IRS, Closing a business), and the form has an 1120S checkbox next to the 1120 box. If you want a refresher on how the two entity types differ during their operating life, see our guide to how a C corporation is taxed.
LLCs are a different story. An LLC taxed as a partnership or as a disregarded entity is not a corporation for federal tax purposes, so it generally does not file Form 966. Its closing paperwork runs through the final Form 1065 or the owner's own return. An LLC that elected to be taxed as a corporation is treated as a corporation and follows the corporate rules, which is why the entity's history with Form 8832 and the entity classification election matters when you plan the close.
The instructions also carve out several cases where Form 966 should not be filed:
| Situation | File Form 966? | What the instructions say |
|---|---|---|
| C corporation adopting a plan of dissolution or liquidation | Yes | Covered by "Who Must File" |
| S corporation adopting a plan of dissolution or liquidation | Yes | IRS lists S corporations under corporate requirements |
| LLC taxed as a partnership or disregarded entity | Generally no | Not a corporation for tax purposes |
| Exempt organization | No | Use Form 990 or 990-PF instructions |
| Qualified subchapter S subsidiary | No | See Form 8869 |
| Deemed liquidation, such as a section 338 election or an election to be treated as a disregarded entity | No | "Do not file Form 966 for a deemed liquidation" |
| Foreign corporation with no US return requirement | Generally no | Only corporations filing a US return are covered |
Sole proprietorships and partnerships never file Form 966 because they are not corporations.
The Form 966 clock starts on the date the board or shareholders adopt the resolution or plan. It does not start when operations stop, when the state accepts articles of dissolution or when the last asset is distributed. The instructions say to "File Form 966 within 30 days after the resolution or plan is adopted to dissolve the corporation or liquidate any of its stock."
Amendments restart the clock. If the plan is amended or supplemented after the first Form 966 goes in, the corporation files another Form 966 within 30 days after the change is adopted. The second form can be short: enter the date the earlier form was filed on line 11, attach a certified copy of the amendment and add any information the first form left out.
Keep signed minutes or written consents that show the adoption date. That date drives the deadline, and it also goes on line 4 of the form. If the corporation keeps its records through an annual corporate compliance checklist, the plan of liquidation belongs in the same minute book as the other board actions.
The form is one page. Gather these items before you start:
For line 10, the instructions give two examples: enter "section 331" for a complete or partial liquidation of a corporation, or "section 332" for a complete liquidation of a subsidiary that meets section 332(b).
Attach "a certified copy of the resolution or plan and all amendments or supplements not previously filed." The president, vice president, treasurer, assistant treasurer, chief accounting officer or another authorized officer signs. If a receiver, trustee or assignee files for the corporation, the fiduciary signs instead.
File the form "with the Internal Revenue Service Center at the address where the corporation (or cooperative) files its income tax return." Check the current Where To File table in the Form 1120 or 1120-S instructions before mailing, and keep proof of mailing with the corporate records.
Form 966 itself is a notice. Line 10 still asks for the Code section, so the preparer needs to know which regime applies.
Section 331 (shareholders). "Amounts received by a shareholder in a distribution in complete liquidation of a corporation shall be treated as in full payment in exchange for the stock" (26 U.S.C. § 331). The shareholder compares the cash plus the fair market value of property received with their stock basis, and the difference is gain or loss on the stock. Redemptions outside a complete liquidation follow different rules, covered in our article on section 302 stock redemptions.
Section 336 (the liquidating corporation). Gain or loss is "recognized to a liquidating corporation on the distribution of property in complete liquidation as if such property were sold to the distributee at its fair market value" (26 U.S.C. § 336). Section 336(d) limits losses on some distributions to related persons and on property contributed shortly before the liquidation. For an S corporation, the corporate-level gain flows through to shareholders on the final Schedule K-1 and adjusts their basis, which ties into Form 7203 basis reporting. A former C corporation may also owe the built-in gains tax on assets it distributes.
Section 332 (subsidiary liquidations). "No gain or loss shall be recognized on the receipt by a corporation of property distributed in complete liquidation of another corporation". The parent must own stock meeting section 1504(a)(2), which means at least 80 percent of the total voting power and at least 80 percent of the total value of the subsidiary's stock.
A calendar-year C corporation with one individual shareholder adopts a plan of complete liquidation on March 2, 2026. It dissolves on September 30, 2026 and distributes $100,000 cash and equipment worth $25,000. The equipment's adjusted basis to the corporation is $10,000, and the shareholder's stock basis is $40,000.
| Step | Figure | Result |
|---|---|---|
| Form 966 due (30 days after March 2, 2026) | April 1, 2026 | |
| Corporation's gain on equipment under §336 | $25,000 FMV minus $10,000 basis | $15,000, reported on the final Form 1120 |
| Shareholder's amount received under §331 | $100,000 cash plus $25,000 equipment | $125,000 |
| Shareholder's gain on stock | $125,000 minus $40,000 basis | $85,000 |
| Final Form 1120 due (15th day of 4th month after dissolution) | January 15, 2027 | |
| Final Form 1120-S due, if this were an S corporation (15th day of 3rd month) | December 15, 2026 |
The Form 1099-DIV for this shareholder would show $100,000 in box 9 and $25,000 in box 10.
Form 1099-DIV. A corporation files Form 1099-DIV for each person "[t]o whom you have paid $600 or more in money or other property as part of a liquidation" (Instructions for Form 1099-DIV). Box 9 shows cash liquidation distributions, and box 10 shows noncash distributions at fair market value on the date of distribution. The instructions say boxes 9 and 10 "apply only to corporations in partial or complete liquidation," and those amounts stay out of boxes 1a and 1b. The $2,000 threshold that took effect for payments made after December 31, 2025 applies to Forms 1099-NEC and 1099-MISC, so the $600 liquidation figure is unchanged as of October 2026.
Form 1099-CAP. This form reports cash, stock or property paid to shareholders in an acquisition of control or a substantial change in capital structure, and it applies only to corporations that must also file Form 8806. Most small-company liquidations never reach it, since the instructions exclude transactions involving stock valued at less than $100 million. They also list, as a separate exception, the case where "[t]he corporation properly reports the transaction under section 6043(a) on Form 966" (Instructions for Form 1099-CAP). Another listed exception covers transactions reported on Form 1099-DIV or Form 1099-B, unless the corporation knows or has reason to know those returns were not filed. A properly filed Form 966 is therefore enough on its own to keep a liquidation out of 1099-CAP reporting.
Form 966 does not replace the corporation's last income tax return. The IRS tells corporations to file a final return and "check the 'final return' box." Both the Form 1120 and Form 1120-S instructions say to check that box when it is "the corporation's final return and it will no longer exist."
Due dates follow the dissolution date. A dissolved C corporation "must generally file by the 15th day of the 4th month after the date it dissolved" (Instructions for Form 1120). A dissolved S corporation files by the 15th day of the 3rd month after that date and checks the "Final K-1" box on every Schedule K-1 (Instructions for Form 1120-S). The 2025 Form 1120 instructions add that a short tax year ending in June is treated as ending June 30 and is due by the 15th day of the 3rd month, so check the current instructions when a dissolution falls in June. Our article on the Form 1120 due date covers extensions and the June fiscal-year exception. Sales of business assets before the liquidation go on Form 4797, and a sale of the business as a whole may also require Form 8594.
If the corporation had employees, it pays final wages, makes final deposits and checks the box on the last Form 941 or Form 944 showing the business closed, with a statement naming who keeps the payroll records. The final Form 940 is marked final in the Type of Return box, and employees receive Forms W-2 by the due date of the final Form 941 or 944.
Contractor payments in the closing year go on Form 1099-NEC. For payments made after December 31, 2025, the IRS reporting threshold is $2,000, according to the IRS Form 1099-NEC FAQs. Our guide to the 2026 1099 reporting threshold explains the change.
The last step is closing the IRS business account. Send a letter that includes the complete legal name of the business, the EIN, the business address and the reason for closing the account, with a copy of the EIN assignment notice if you kept it. The IRS closing-a-business page gives the mailing address as Internal Revenue Service, Cincinnati, OH 45999, and it warns: "We cannot close your business account until you have filed all necessary returns and paid all taxes owed." That makes the account closure letter the final item on the list, after Form 966, the final return, the 1099s and the payroll returns are all filed.
State dissolution is a separate process handled with the secretary of state and the state tax agency, and it does not satisfy the federal Form 966 requirement.
When is Form 966 due? Within 30 days after the corporation adopts the resolution or plan to dissolve or liquidate. If the plan is amended or supplemented, another Form 966 is due within 30 days after that change is adopted.
Do S corporations file Form 966? Yes. The form's instructions apply to any corporation that adopts a plan to dissolve or liquidate, and the IRS lists S corporations under its corporate closing requirements. The form includes an 1120S checkbox.
Does an LLC file Form 966? Generally no. An LLC taxed as a partnership or disregarded entity is not a corporation for tax purposes. An LLC that elected corporate tax treatment follows the corporate rules, and an election to become a disregarded entity is a deemed liquidation for which Form 966 should not be filed.
Can Form 966 be filed electronically? The instructions direct filers to the IRS service center where the corporation files its income tax return, so plan on mailing a paper form. If the prior return was e-filed, enter "e-file" on line 5.
Is Form 966 the same as the final tax return? No. Form 966 reports the plan. The final Form 1120 or 1120-S, with the final return box checked, reports the income for the last tax year, and the corporation needs both.
Madras Accountancy supports US CPA firms and their business clients with tax preparation, bookkeeping and compliance work, including the filings that come with closing a corporation. To talk through a dissolution or liquidation engagement, contact our team.
The section 4960 excise tax is 21% of nonprofit pay over $1M. From 2026 it covers all employees. See the medical carve-outs, Form 4720 and a worked example.
The paid family and medical leave tax credit is permanent from 2026. See the 12.5% to 25% rates, the premium option, the 6-month rule and how Form 8994 works.
Opportunity zones become permanent in 2027 under the One Big Beautiful Bill. See the new deferral, rural bonus, and the 2026 handoff.
