BUSINESS SALE SCH C

[catax]

I HAVE A CLIENT THAT SOLD HIS BUSINESS. HAVE ALL THE DOCS WITH BREAKDOWNS ETC. MY FIRST THOUGHT WAS SCH D FOR REPORTING THE GOODWILL AND NON COMPETE AGREEMENT. THE FIXTURES AND EQUIPMENT ON THE 4797. IS THIS CORRECT OR SHOULD I PUT IT ALL ON THE 4797 TO FLOW THROUGH TO THE SCH D. I LOOKED AT MY REFERENCE BOOKS AND AM NOT FINDING A CLEAR ANSWER. YOUR THOUGHTS. NENA

[RoyDaleOne]

First, non compete must be include in gross income as ordinary income,

it is not subject to SE tax.

Goodwill is proably a Section 1231 asset for Form 4797.

[Booger]

First, non compete must be include in gross income as ordinary income,

it is not subject to SE tax.

Goodwill is proably a Section 1231 asset for Form 4797.

Roy, isn't there also a Form that needs to be attached to the buyer's and seller's return that

shows what assets were purchased/sold and allocation of the purchase/sales price?

For the life of me I cannot remember the form number.

Booger

[catax]

Form #8594 Asset Aquisistion Statement. I have that all worked out. I was just stumped as to where to enter the sale of the various assets. I am finding little information in my reference books on where to actually put it. So the non-compete aggreement could flow to short term gain and be taxed at my clients ordinary rate. But is that the proper treatment. What form should it go on Sch D, 4797 or somewhere else? Nena

[Booger]

Form #8594 Asset Aquisistion Statement. I have that all worked out. I was just stumped as to where to enter the sale of the various assets. I am finding little information in my reference books on where to actually put it. So the non-compete aggreement could flow to short term gain and be taxed at my clients ordinary rate. But is that the proper treatment. What form should it go on Sch D, 4797 or somewhere else? Nena

Nena, the non-compete agreement gets reported on Form 4797, (I believe page 1, Part II).

The "ordinary" gain from this agreement should flow directly to your client's 1040.

It should show up on the line where it says income (loss) Form 4797 (don't know line number).

Hope this helps.

Booger

[catax]

Thank you. I just wanted to be sure that I was going in the right direction with the 4797 idea. I appreciate the input. Nena

[RoyDaleOne]

Non compete payments is not the sale of anything, it is as stated money

paid for the "service" of not competing. Therefore, I think 1040 Page 1

other income is the correct place for this money.

You can sell the assets from the depreciation part of the program

and answer the questions and it will take of putting the assets sold

on the correct schedule.

[catax]

The problem with this one is very little of the sale was actual assets mostly goodwill and non-complete aggreement. Anyway I have worked it all out keeping everyones suggestions in mind. It was very helpful to have feedback. Nena

[michaelmars]

i put it on line 21 -other income