Errors on Form 8949 for Sale of Business

[Jax123]

I have a client who sold his business, LLC-tax class S Corp. I'm preparing his personal tax return now. I have entered in the amount that he sold the business for on Form 8949 as a Long-term transaction not reported on Form 1099-B.

Doing this, it is giving me errors because I needed to override and enter the amounts on the Part II, 1(d)-(e). How do I resolve these errors that are occurring? The client sold his company for cash, which is what I am putting on Part II, 1(d) in the "sales price". 

What am I missing? How do I resolve these issues?

Any help would be much appreciated! THANK YOU!

[IRonMaN]

Did he actually sell the stock or did he sell assets?

[taxiowa]

I think you first need to ascertain who sold what.  Did the S-corp sell the business it was operating.  Or did your client actually sell the S-corp to someone?  And who is doing the S-corp tax return?

[Jax123]

He sold it all! He no longer owns the S Corp, nor its assets.

[Jax123]

He sold it all. A company with a separate EIN purchased the business and all its assets.

We are preparing his business return as well and marking it as final return.

[IRonMaN]

So if the business sold all of its assets, why are you trying to put the sales price on the shareholder's 1040?  The business would report the sale on its 1120S.

[Terry53029]

As others have told you the sale will be reported on the 1120S, and a K1 issued to owner. Are you sure the buyer bought the stock and assets (most sales of S-Corp are assets only)

[Jax123]

 It was an asset purchase only. According to their sales agreeement, everything was allocated to Goodwill of $500k

[IRonMaN]

And as noted above, the 500k gets reported on the 1120S

[qbteachmt]

"It was an asset purchase only. According to their sales agreeement, everything was allocated to Goodwill of $500k"

Maybe it helps to think of it like this: Unless he owned that, he didn't sell it.

I can't sell you Ford's assets, just because I hold Ford shares of stock. That's what he owned: shares of stock in that S Corp. The S Corp owned and operated the business. That's why he also was an employee on payroll to that entity.

So, either the entity disposed of everything to him first (and he made a personal sale), or the entity sold off everything of value, settled its debts, etc, and no longer operates as that company. And he still owns shares, since the buyer did not buy the shares, the EIN, the entity. He has ownership of an empty corporation. Is he shutting that down, too, and needs to file not only an 1120S, but the final 1120S?

And what tax year did that sale occur?