Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Taxes: Help with an Installment Sale
Old 03-14-2015, 03:13 PM   #1
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 637
Taxes: Help with an Installment Sale

I sold a small business this year where the buyer will pay me over the next 5 years. I've had the business since 2008, so I know that it is a capital gain.

The contract was set up so that X amount went to the domain and website, $525 was for equipment, and the balance was goodwill.

The buyer made a $4000 down payment, of which $525 was for the miscellaneous equipment (used telephone used copier etc.) Monthly payments started January 1 of this year, so no interest to report this year.

I know that I need to use form 4797 and 6252 to report the sale.

It seems I need to report the $4000 down payment, but of that, $3475 goes towards the principal, and the $525 I believe is taxable to me and I am uncertain where to or how to report that $525.

I'm using TurboTax, and it would probably cost me more than $500 to get an accountant involved for what I thought was going to be something relatively simple.

Can anyone help me with this?
__________________

__________________
bizlady is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-14-2015, 04:32 PM   #2
Recycles dryer sheets
 
Join Date: Nov 2011
Location: Los Angeles, CA
Posts: 65
I can tell you this...I had an installment asset sale of my business that led me to FIRE and even though I am a CPA, I hired an asset sale tax specialist CPA and it was worth every dime. It would have taken me years to research all the nonsense involved. I know that's not what you wanted to hear, but it's the truth (or was for me). Many good lucks.
__________________

__________________
z-d-g is offline   Reply With Quote
Old 03-14-2015, 04:42 PM   #3
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 637
I hear you! Kind of scary to hear this for me from a CPA :-)

But the business was a relatively small one, with only $525 in hard assets, and the rest really the website and goodwill. Sale price certainly not enough to retire on.

I know we classified the assets correctly, and specified those in the contract. But that $525 is just plain tripping me up.

Worst-case scenario, I'll probably just report as other income-as we hardly fall into the "good choice for an audit" group. Still, I would prefer to file cleanly, but just can't justify the expense of an accountant for a relatively small sale.

So still hoping someone out there can guide me :-)
__________________
bizlady is online now   Reply With Quote
Old 03-14-2015, 04:46 PM   #4
Recycles dryer sheets
 
Join Date: Nov 2011
Location: Los Angeles, CA
Posts: 65
Yeah, a few clarifications:

1) I never practiced tax a day of my life, so the last time I had to deal with tax code was when I passed the CPA exam.

2) You make a good point about the size of the sale and can probably do this yourself with software and research.

3) Yeah, doesn't sound like you'll be audited in any case.
__________________
z-d-g is offline   Reply With Quote
Old 03-15-2015, 07:40 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,417
See the example on page 10.

http://www.irs.gov/pub/irs-pdf/p537.pdf
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Reply

Tags
installment sale


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Delaying SS is "buying annuity on the installment plan" omni550 FIRE and Money 45 03-10-2011 11:22 AM
Taxes Re: Sale of Business flpanhandle Other topics 4 06-04-2008 10:09 PM
Taxes, Taxes. Taxes mickeyd FIRE and Money 1 02-09-2008 01:18 PM
Investment Property Sale Taxes ferco FIRE and Money 12 07-08-2006 07:36 AM
Help, help, help Lee FIRE and Money 10 02-20-2005 05:47 PM

 

 
All times are GMT -6. The time now is 11:12 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.