As is the case with most tax transactions, regardless of the size of the transaction, the tax implications can get complicated. Here are my comments based on your facts:
- You reflect class IV and V as one number. These are two different lines on the form 8594, and as such, should each have their own specific $$ amount.
- You should complete your Schedule C as you would normally up to the date of the sale.
- Once completing your schedule C you will then know what your ending inventory is; assuming you have any inventory.
- At this point you will reflect the proceeds received and shown on form 8594 class IV along with your ending inventory on form 4797 part II (ordinary income). The amount on the 8594 is the proceeds or sales price and your ending inventory is the cost basis.
- This component is shown here as the sale transaction was not part of your normal business, and as such, is not a part of the Schedule C.
- Now you have class V assets. You will need to allocate the amount reflected on form 8594 among all the assets. A typical method is to allocate the proceeds based on the original cost.
- From here, you will need to go into your fixed asset section and show the assets as disposed with the proceeds received as just noted.
- TT should then reflect these items on the appropriate form; most likely various places on form 4797.
- For your class VI and VII assets, unless you actually purchased an intangible of some sort, your basis in these assets will be zero. These assets will then be reflected on form 8949 which will then carry to Schedule D.
*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.
