Form 4797 or Form 8949 for sale of business assets

[Aloof]

For reporting sale of Goodwill and Intangible assets, when selling my sole proprietor (LLC) business in an asset sale, would I use Form 4797 (which is shown as "enterable" with no data on Turbotax) or Form 8949 (which is shown as filled on Turbotax, but I think that it might be the wrong form).

Thank you.

[DianeW777]

Goodwill is reported as a capital asset on Schedule D.  Whether it is short term or long tern is dependent on the holding period.  Goodwill is a Section 197 intangible for tax purposes and is a business asset. Likely, other intangible assets might be capital assets as well. However any asset that was depreciated or amortized would have recapture of gain and reportable on Form 4797.

1. Long term: held more than one year (one year plus one day)
2. Short term: held one year or less

Important Information:

Form 8594 must be completed (both buyer and seller do this and they should agree).  

If you do not file a correct Form 8594 by the due date of your return and you cannot show reasonable cause, you may be subject to penalties.

Per the IRS, The purpose of filing the form is 'Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale if goodwill or going concern value attaches, or could attach, to such assets and if the purchaser's basis in the assets is determined only by the amount paid for the assets.'

• Sale of a Business

[Aloof]

This is all good information. Thank you.

It seems like I may just need Schedule D and Form 8594, not either 4797 or 8949, from what you say. I don't know why 4797 and 8949 are appearing as I try to work through the return.

(I was aware of the importance of filing Form 8594, but your details were also super helpful.)

I'll take my question to the phone support, if I can, where I can discuss my situation in more detail, but if you have more comments, that's great too.

[DianeW777]

Yes, I wouldn't be concerned about the 8949, it may be needed even though the information is carried to the Schedule D.  As far as the 4797, if you are confident you do not need this form you can use one of the links below to delete it from your return.  You may want to print your return or review it before you decide to delete it.

You'll need to delete this form 4797. 

• If you're using TurboTax Online software and need to delete a form, click here.
• If you're using TurboTax CD\Download software and need to delete a form, click here. 

@Aloof 

[Aloof]

Some FOLLOW-UP Questions:

Can Goodwill related to a business asset sale be reported on 8949?

Can the remaining long-term capital assets also be reported on Form 8949, if there was no depreciation ever claimed and they are long-term?

Can they be grouped as "Intangible assets - other" and be described that way on form 8949?

Also, I am wondering if I would be better served by using the Business version and not the Home and Business.

[DianeW777]

Please see the answers below.

1. Yes, goodwill can be reported on Form 8949 and Schedule D.
2. It depends.  If these were not assets that would require depreciation then you can report capital assets held long term on Form 8949 and Schedule D.  If they were assets that were depreciable and they inadvertently were not included in the tax return correctly, the IRS tax law requires depreciation and it will be recaptured whether you used it or not (use it or lose it).
3. I would recommend naming the assets individually and would not group them together for better identification should you need to know that later.
4. No, TurboTax Business is not used for personal income tax returns, it is strictly business software.
   1. What types of business returns does TurboTax Business handle?

@Aloof