Your K-1 instructions must be different than what I am seeing.
- https://www.irs.gov/instructions/i1065sk1
- Regardless, as stated previously, if you want to put them on box 11 as ordinary income, go ahead. The end result is the same.
- Form 4797 is used to report the disposition of assets used in a trade or business. That's what you sold.
- As noted previously, I typically see the noncompete as a separate agreement between the buyer and the seller (not the business).
- The instructions for form 4797 Part II state: If a transaction is not reportable in Part I or Part III and the property is not a capital asset reportable on Schedule D, report the transaction in Part II.
- As a result of bullet 5, I would put the items / assets on form 4797. If you can't figure out how to get them there, as stated previously, as long as the end result is correct, should you be audited, there will not be any implications.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
