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Returning Member
posted May 8, 2022 10:23:05 AM

Disposition of Assets That Constitute a Trade or Business

if i sold all assets of s-corp (sold the business) then where do i enter that information on turbotax?

where do i report that gain or loss from the transaction? please advise. thanks

0 5 897
5 Replies
Level 15
May 8, 2022 10:30:37 AM

 

 

Level 15
May 8, 2022 10:32:41 AM

Level 15
May 8, 2022 10:54:21 AM

if you sold the assets as opposed to your stock the S-Corp must file a final return and it is the one that reports the gain or loss on the sale of its assets. as noted the S-Corp would need to file form 8594 which details the allocation of the sales price which the IRS will match to what the purchaser reported.  if there is a difference you can expect that the IRS will audit.

hopefully, there is a written agreement because that will prevail. if not the IRS will likely take both owners to court where they can argue as to what was agreed to and the judge will make the final decision unless both parties agree to an out-of-court settlement.

 

https://www.irs.gov/pub/irs-pdf/f8594.pdf 

https://www.irs.gov/pub/irs-pdf/i8594.pdf 

 

 

Level 13
May 8, 2022 11:34:02 AM

A few comments:

  • As has been noted, the form 8594 is a key form that needs to be completed by both the buyer and seller (which means both forms need to match).
  • If there is a noncompete agreement, I would recommend that this be a separate agreement.
  • There is no mention if this was a cash deal or if there is an installment sale.
    • If cash and the S corp will be done, then as noted, a final return needs to be completed.
    • If there is an installment sale, there are some additional steps and the order of the steps is critical
  • Regardless of whether this is a final S corp return, hopefully you have maintained a basis schedule of your investment in the S corporation.  Without this, you will not be able to determine your overall gain or loss
  • If a final S corp return, don't forget to contact your Secretary of State and dissolve the corporation

Level 2
Dec 13, 2024 7:30:20 AM

Is it considered an installment sale if just $1million of a $29million asset sale was put in escrow for two years to ensure all the reps and warrantees are met?  If so, do I still report the total $29million on the Form 8594 or only the portion that I receive in this tax year? (I believe yes).  And on form 6252 do i report the selling price of only the $28million i received this year? (I believe yes).