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mrwill1808
Returning Member

Sold a business, how to close it out and report the income correctly

Hi,

 

I'm trying to close out a business that was sold.

 

I have checked the box that I have disposed of the business in the current year, but how do I deal with reporting the money I received?

 

Sole proprietor, no employees, just my wife, she started the business from scratch in 2013.  We did not break up the costs between goodwill/tangible assets in the contract, when it was sold.  There was also inventory part of the sale.  Mainly the clients were what was the value along with the cheap rent.

 

Do I create 2 new business assets (Goodwill & Tangible).  Do 80/20 for each?  

 

What do I do with each of the existing assets that imported?  Do I mark them sold?  None of them have any depreciation left. 

 

The closest I could find that could help me is:  https://ttlc.intuit.com/community/business-taxes/discussion/i-sold-my-business-in-december-of-2019-w...

 

Thank you,

 

Will

2 Replies
ThomasM125
Employee Tax Expert

Sold a business, how to close it out and report the income correctly

Basically, you need to report the sale proceeds and the cost basis of the business, the difference will be a taxable gain or loss.

 

1. Find the "Income and Expenses" menu option in your TurboTax program

2. Find "Investment Income" in the list of categories

3. Click on "Stocks, Mutual Funds, Bonds and Other"

4. Work through the program to find "Choose the type of Investment you Sold"

5. Choose the "Everything Else" option in the list of investments

6. Enter the information requested about your sale (date purchased, sale amount, cost, etc)

 

Your cost basis in the business will be anything you contributed that you have not taken a deduction for, such as assets that have not been fully depreciated or intangible assets that have not been fully amortized.

 

If you allocated some of the sales proceeds to assets that were transferred as part of the sale, you can edit each asset sold and enter the sale price for each one individually.

 

 

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mrwill1808
Returning Member

Sold a business, how to close it out and report the income correctly

@ThomasM125 - Thank you

 

I also forgot to note that I also moved to another state in November.  

 

When I report it this way the second state taxes also increases.  The sale of the business occurred in April, not sure why any state taxes of another state would go up?

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