The private company is an S corp and I own 40%. We sold all the stock in the company which we bought years ago (stock) but the new buyer is only paying about half at close and will pay in two additional payments in the next 3 years. How do you do that in Turbo Tax since I have a basis (my 40% of the purchase price of all stock in the company) but I am not realizing the purchase payment at closure but over time. I have a note for the remaining amount. How do you do that in Turbo Tax? Overall there is no gain between purchase price by me and sell price by me.
Generally, the type of sale you describe would be considered an "Installment Sale", since you receive payments over more than one tax year. In such a case, any gain (profit) is reported over the term of the contract.
However, per IRS Pub 537 Sale at a loss: If your sale results in a loss, you cannot use the installment method. If the loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale.
Since you have no gain (purchase price = selling price), you would report the entire sale at the beginning of the contract.
Either option (gain or no gain) is entered under the same topic in TurboTax.
To enter an installment sale (Form 6252), search on "Sale of Business Property." Use the jump-to link to go to the start of this topic.
- On the page "Any other property sales," say Yes, or Add a Sale.
- For an installment sale, check the box titled "Sales of real estate, cars or anything else for which you receive payments over two or more years."
- Or you can choose another category to report the entire sale this year.
- Follow the prompts to enter your sale information.