We had a client last tax season that had a problem and they insisted that needed fixing.
They had a company that they stopped paying for the annual report on a couple years before. So the state involuntarily dissolved the corporation.
They could reopen the corporation, keeping the name and all the relevant information, but they did not want to pay all of the fees that the Secretary of State charges to bring an old company back to life. The longer it is closed the higher the cost, the state need those fees and penalties.
The other option was to start a new corporation, but this involved costs and work to get it all started.
They wanted a no-cost option, which then gets you away from dealing with Illinois.
After my staff went round and round with them, I got involved and spelled it out very simply.
To resurrect will cost X, opening a new one will cost Y. The third option which they went with, was to pass on the first two options and just claim the income on a Schedule C, record the minimal expenses and pay the taxes.
So, the old S-Corporation became a Sole Proprietor. The income was minimal and missing the prior two years and future income was far from certain. Which is why the costs were an issue.