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Bill in Advance, Sold Business

I billed my clients quarterly in advance, Nov-Jan, Dec-Feb (rolling quarters). I sold my business to another firm effective 1/1/2024. So the 1099-NEC I received from my custodian shows income for Jan-Feb 2024 that belonged to the new firm. How can I account for this on my Schedule C so my income isn't overstated?

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3 Replies
MinhT1
Expert Alumni

Bill in Advance, Sold Business

You'll issue a form 1099-NEC to the new firm for the amount of fees that you transferred. This'll allow you to deduct that amount from your income.

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Bill in Advance, Sold Business

Thanks for the quick reply! Do you mean issue them a 1099-NEC for 2023? Where do I enter this in TurboTax so that it comes off my income?

LeticiaF1
Expert Alumni

Bill in Advance, Sold Business

You should report this on your Schedule C as an expense.  IT could go under the Other Expenses section, and write a description like advance transfer or fee transfer.   To enter this in TurboTax:

 

  1. Open or continue your return.
  2. Go to Wages & Income
  3. Select Edit/Add next to Self-employment income and expenses
  4. Select Edit under your business 
  5. Select Add Expenses for this work
  6. Scroll down to Other miscellaneous expenses, select the box, and Add it
  7. The program will take you back to the main expense list, select Start next to Other miscellaneous expenses
  8. Enter a description and the amount of the expense.  

 

 

 

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