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Lou1428
Level 2
March 9, 2022
Question

Sale of business on installment sale

  • March 9, 2022
  • 3 replies
  • 21 views

I have a Client files 1120s. Sold business for $210,000 assets was $190,000 fully depreciated. Its installment sale first year received $108,000. The program is picking up the whole $190,000 on schedule 4797 carrying to page one as income. Also the installment sale is being taxed at $10,600, Am I doing this right or do I need to change something.

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3 replies

IRonMaN
IRonMaN
Level 15
March 9, 2022

You can’t spread gain from depreciation recapture - it is all taxable in the year of sale.

Slava Ukraini!
    jeffmcpa2010
    Level 10
    March 9, 2022

    Did they sell the S-Corp, or did they sell the Assets out of the S-Corp?

    If an asset sale, What types of gain were involved? If all of the gain is 1245 recapture, then it may be correct that all of the gain is being picked up in the year of sale.

    Also the installment sale is being taxed at $10,600,

     

    The return is showing tax liability on the 1120-S return of $10,600? 

     

      Lou1428Author
      Level 2
      March 9, 2022

      They sold only the asset

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