Hello Group,

I have a professional practice operating as an S-Corp.   Client sold the practice in an assets sale with $20,000 allocated to Equipment and $380,000 to Goodwill.  There was $50,000 cash down at closing and two separate installment obligations receivable.  $50,000 due annually over 3 year (starting after 1 year) contingent on the sellers employment to assist in the transition, and a $300,000 Promissory Note calling for monthly payments over 10 years with 3% interest calculated.  Both installment obligations indicate  that the payments can be made directly to sole shareholder rather that the S-Corp. 

Client wishes to liquidate the entity and receive future payment personally.  In my head, I want to reflect the appropriate installment gain form the 50,000 down payment, and distribute the installment obligations to the shareholder in liquidation of the entity, with the intent that payments received under these obligation personally should be reported as installment sales at the personal level (one for fixed assets and one for goodwill).

I am struggling on how to get this properly reflected on the tax return and the K-1.

Thanks for any help you could provide.

Joe Wagner