s corp asset sale

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My business partner and I sold our S corp in 2019, and I will be receiving payments over 5 years. A portion of the 2019 payments flowed through the final k-1 and all expenses were applied against those amounts. The balance of my 2019 payments were paid to me directly and the buyer has issued a 1099-Misc for those amounts. The accountant for my prior company has told me that those payments and all future amounts are long term capital gains. how do I reflect that in turbo tax?

S-Corp

ThomasM125Answer

Alumni - Intuit

The gain on sale would be capital gain income for the most part, unless you had depreciation recapture, in which case some of the income could be considered ordinary income.

You report it in TurboTax under "Income and Expenses", then "Less Common Income", then "Installment Sales". You will be asked to enter the sales proceeds, basis of the property and amount of any prior depreciation taken.

Once your gross profit is determined, you will be taxed on that percentage of the proceeds you receive in the current year.

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smarttees

Level 5

you need a tax pro...you have something like an installment sale but you can't use that for the sale of depreciating assets or inventory....get an accountant who is familiar with these types of sales.

PatCMAuthor

Level 2

Thanks, but it was a consulting firm and we basically sold our client list (goodwill). The down payment and expenses, and ordinary income portions were taken care of in my final K-1. The firm's accountant already confirmed that the remaining payments are installment sale capital gains. I did get my solution as to how to reflect it in turbo tax elsewhere though.