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Question

S Corp business sale of assets on a contract

Forum|Forum|2 years ago
June 20, 2023
1 reply
0 views

I sold a portion of my assets from my S Corp on a 5 year contract. Assets included fixtures, inventory and the balance to goodwill. My question is do I prorate the gain on the sale of assets over the 5 year contract based on the money collected in that given year?

You can either claim the entire sale in one tax year OR use the form 6252 to spread the sale over the 5 years of the contract. If you are closing/selling the business then reporting it all in the year the business closes may be the better choice however you can look at it both ways and make an educated choice. If you do use the 6252 then and the business is closed then the installment sale would transfer to your personal return.