Sale of stock in private company proceeds in cash and promissory note.

[Virginia Matty]

I sold 100% of the shares in my business, which is a small C-corp.  Part of the proceeds were in cash and rest in a seller's note.  First, since it it was my shares I sold do I need to report it using 1099-B or should the new owner issue it (or no one?).  Then do I recognize capital gains for only the portion paid in cash and use installment sales on the remaining amount when received? And how do I get Turbo Tax to do all this?

[Mike9241 · Accepted solution]

There are no 1099-Bs in a private sale but you still have to report the sale.

You have a choice if there was a gain on sale. You can report the entire sale in the year it occurred and be done with it except for reporting interest every year it's received. The other option is to report the sale on an installment sale basis using form 6252. Under this method, each year you receive proceeds you report a capital gain based on the principal received times the gross profit percentage. you also report the interest.

installment sales are covered underthe "less common income" section on the wage and income tab. the lower online versions of Tutrbotax do not cover this. All desktop versions do. 

which is best? sorry I don't have a crystal ball. 

[Virginia Matty]

Thanks so much for such for a fast reply!