Re: Sale of business

How do I classify the sale of a Pepperidge Farm distributorship route (bread route)? It consists of 13 stores, and I used my own truck. The sale consisted of the route and the truck. I understand the truck will go on form 4797, but the route does not easily fit in any category. Any help?

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Did you pay for the distributorship? I would assume that you did.

Thus, the transaction sounds like the sale of a franchise which, typically, would entail capital gain (if you realized more than you paid for the distributorship) assuming you did not retain any power, right, continuing interest, etc.

Correct, I do not retain any rights in business. I felt it was a franchise also by definition. Which form would that best fit? I was unsure of Form 4797 because I felt like the franchise didn't meet any of the IRS definitions or criteria. The business distributorship is more of a contract and from what I've looked at, the IRS considers it an ordinary gain. Am I incorrect?