Tax Payment deduction when business is sold
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Siberyachka
Returning Member

Tax Payment deduction when business is sold

I sold my business (single owner LLC) in December 2019 as assets sale however I discovered I owned some money to IRS and I make all payments for  Form 940 in May 2020. I have not filed my 2019 taxes yet. I am preparing Tax Return using Turbotax business. Question 1: Can I deduct my business prior years Form 940 (2016-2019) tax liability payments  on 2019 Tax Return?Question 2:  I had been filed final state and federal returns in December of 2020 and I was wondering if I can deduct as business expense on my 2019 tax returns?

10 Replies
Anonymous
Not applicable

Tax Payment deduction when business is sold

as a cash basis taxpayer, expenses paid in 2020 for your business are deductible on your 2020.  Any penalties and interest paid are not deductible.

 

 

what final federal returns? there are no federal income tax returns for a single member LLC.  

and how do you file returns in 12/2020?  for 2020 again any business expenses paid would be deductible that year

Anonymous
Not applicable

Tax Payment deduction when business is sold

 
Critter
Level 15

Tax Payment deduction when business is sold

 
Critter
Level 15

Tax Payment deduction when business is sold

If you are using TT Business program are you filing an S-Corp return ?  

Siberyachka
Returning Member

Tax Payment deduction when business is sold

I am a single owner LLC , I file schedule C 

Critter
Level 15

Tax Payment deduction when business is sold

Then I assume you meant you were using the Home & Business version  or the online Self Employed version since the TT Business version would be incorrect. 

Siberyachka
Returning Member

Tax Payment deduction when business is sold

I had been filed final Sales & Use Tax Returns, Form 940 and 941 marked as final in 2020, received 50% payment from business sale in 2019 but still waiting for remaining balance that I anticipate to receive this month. On my 2019 Tax Return I indicated that I sold my business in Dec 2019 however I don't know if I should include 50% of payment received for business  and all 2019 actual revenue and expense since I am cash basis taxpayer. How would I record all tax payments made in 2020 for tax year 2019 and remaining 50% payment for my business if I sold my business in 2019?

Siberyachka
Returning Member

Tax Payment deduction when business is sold

I am using Home & Business TT version

Critter
Level 15

Tax Payment deduction when business is sold

 
Critter
Level 15

Tax Payment deduction when business is sold

You should not indicate the business was closed in 2019 since it had obligations to handle in 2020 ... that is the year the business is finally closed for good. 

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