Legal Question in Business Law in California

Re: transfering money from one company to another

I assume from the context that both companies are corporations. If so, the tax question is likely to hinge upon whether the salary you took was unresonable and disproportionate in relation to the value of your services; in other words, if you worked full time, paid yourself $150,000, and that was substantially all of the taxable profit, but it would have cost the company about the same amount to hire an outsider to run the company as skilfully as you did, the IRS is in a weak position to recharacterize part of your salary as a hidden dividend.

If you paid yourself an excessive salary from Company A, it matters not at all whether you did so to fund Company B or to play the slots at Harrah's. Excess salary to an owner can be treated as a dividend (you didn't say whether the businesses are (or aren't) "S" corporations).

Your issues are primarily accounting questions rather that legal issues at this point. I suggest seeking the advice of a CPA with a tax specialization. The CPA (or lawyer) advising you would need to look at the actual numbers in order to form an opinion as to the reasonableness of the salary expenses and deductions.

As a lawyer I would close by adding that you should not close down a corporation from which you or any other insider have sucked a lot of cash without first paying off all creditors and claimants of whatever ilk. Using A - B corporations to play a shell game to avoid creditors is fraudulent and some savvy creditor is sure to blow the whistle to your great chagrin and financial undoing.