Business sold in installment sale but business name and EIN stayed the same

[Jane918]

If a business was sold in an installment sale, but the business name and EIN stayed the same, how do you report that installment sale on the 6252? I understand that the names will change on the K-1's and the profit/loss goes to the new owners for the whole year, but I'm not sure how to proceed with the 6252.

[George4Tacks]

What type of entity?

K-1s? What flavor? 1120S, 1041, 1065????

Did an individual do the sale?

[Jane918]

S Corporation (1120S)

It was an S Corp before. Nothing changed with the entity. It was all transferred. The business name and the EIN stayed the same. It was just a change in ownership, but the new owners are paying for the business on an installment sale basis.

[Terry53029]

 The tax basis of the S corporation's underlying assets and the S corporation's tax accounting methods are not affected by the stock transfer — asset basis and accounting methods carry over to the new ownership. On form 6252 you report the type of property as a capital asset then follow instruction for rest of form. Profit will be reported on schedule D (capital gain). It has been my experience that all of the S-Corp sales have been asset only sale, because no one wants to be liable for the S-Corp being sold. Are you sure it is a stock only sale.

[Jane918]

It's a bar/tavern with gaming. The building and contents are all included. The name and EIN needed to stay the same due to gaming issues

[George4Tacks]

S-Corp is a Corporation. Corporations are owned by individuals that hold stock. Was the stock transferred? Was stock ever issued? I truly hate S-Corps because they were likely setup by the bartender at the beginning. 

[Jane918]

Yes, the stock was transferred. It was all originally set up by a lawyer and the transfer took place involving the same lawyer. 

[Jane918]

Ok, I think I was reading way too much into this...so it would be considered a stock only sale. Thank you all!

[BobKamman]

The sale is reported on the returns of the sellers.  Nothing is reported on the 1120-S -- as you note, just the names on the K-1s will change, dividing profits between former owners and new owners according to period of ownership.  

[Jane918]

Ok, so that leads me to another question. Through my research, I read that the new owners would take over the profits/losses for the entire year, which doesn't seem fair, but that's the way it reads. (From what I read, but I may need to do more research on this) So, if this isn't the case, where do I put the dates for the partial year so that all of the K-1's come over correctly?