I have a blog business and want to sell it and was told that I will have to pay capital gains on the sale of it. It is a Sole prop that I started. I was told that it is worth approximately 150K(based on an evaluation I had done) and I started it from nothing and all assets, which are few, were written off each year. If I sell it for 225K, is that entire amount a gain? Is my goodwill or me building up the business and clients it worth anything to bring down the gain?
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@Looney1966 wrote:
Is my goodwill or me building up the business and clients it worth anything to bring down the gain?
No. The sale of goodwill that, essentially, you created would have a zero basis and anything received above $0 would be capital gain (long-term if more than one year).
See https://www.thetaxadviser.com/issues/2015/apr/tax-clinic-07.html
Yes, i started this in 2012, so you are saying that the entire $22K that I get is 100% long term capital gain. Correct?
The entire sale price would be long-term capital gain.
Can my valuation be used for anything?
No, unfortunately. The valuation is nothing more than that; an estimate of what the business is worth.
Your basis is $0 so anything you receive above that would be long-term capital gain.
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