The sale of a business asset can result in a taxable gain. There is no deduction for gifting the proceeds, unless the recipient is a registered charity. Your available offsets to this income would be capital losses carried over from prior years or other capital losses in the current year.
However, the gain on the sale would be reduced by selling expenses (like commissions) and the total depreciation claimed while the property was used as a rental asset. Enter this sale in TurboTax under Sale of Assets in the Rental Property section. If you have been reporting this activity in TurboTax, your adjusted basis has already been calculated.
Also note that any gift worth more than $16,000, must be reported on Form 709: U.S. Gift (and Generation-Skipping Transfer) Tax Return, which is due April 15 of the following year. Even if you do not owe a gift tax because you have not reached the $12.06 million lifetime limit, you are still required to file this form if you made a gift that exceeds the $16,000 annual gift tax exclusion level. The IRS needs to keep a running tab of your lifetime exemption.
Read more about this here: TurboTax Tax Tips: The Gift Tax
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