Self employed

cmitchyd · ‎March 25, 2020

In your comments below regarding asset sale, what are the tax rates (ordinary income vs capital gains) for the different Asset Classes (I to VII) in Form 8594 (Asset Acquisition Statement)?

I am looking at selling my sole proprietor LLC which only has 3 Assets that I think are allocated as follows:

Class III - Accounts Receivable
Class VI - Non-Compete Covenant (which I've heard is required to qualify for Personal Goodwill?)
Class VII - (Personal) Goodwill)

Are those the correct Asset Classes for those 3 Assets?

Is a Non-Compete Covenant really required to qualify for Personal Goodwill?

What are the tax rates (ordinary income vs capital gains) for these Asset Classes?

Are all 3 of these Assets from Form 8594 then "input" into Form 4797 (Sales of Business Property)?

And/or are these Assets values input into other Forms/Schedules as well? For Example Schedule C and/or D?

What are the "output" Forms/Schedules for Form 4797? For Example Schedule C and/or D?

Thanks!

Mitch

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The sale of the business does not go on schedule C, that is only for business income and expenses. You would bring up each asset that you sold in TurboTax and enter the sale amount for that asset. Turbotax will factor in the depreciation taken in current and previous years and determine a gain or loss on the sale and report it on form 4797.

For the Goodwill, you would report that as an investment sale as follows:

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 sold, sale amount, etc)