Noncompete agreement between 1120S (seller) and LLC

[jgcpa]

Form 8594 includes a noncompete. However, the payment went directly to the Sellers (shareholders/owners) and not into the Inc's bank account. Does the Noncompete payment appear on the 1120S ( either the 4797 as proceeds and cost) or not at all. I am concerned that the proceeds stated on the 8594 will not match the 1120S if I leave off the non-compete. Or, do I make a note on the F8594 to state the noncompete payment was paid directly to the shareholders/owners ?

[IRonMaN · Accepted solution]

Who is supposed be doing the noncompeting according to the agreement - the corp or the person?

[jgcpa]

I just read the Non-compete agreement. The 3 Principals on the sellers side are the 3 shareholders/owners of the seller.

[jgcpa]

the noncompete is with the three persons

[IRonMaN]

Then it wouldn’t show up on the corporate return.