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Where does turbo tax deal with sale of a business.

Forum|Forum|6 years ago
June 7, 2019
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I have Turbo Tax Home and Business. In what section does it ask for details of a business sale (income from sale, goodwill, etc)

TurboTax Home & Biz Windows

Best answer by KennethB

The sale of a business is comprised of the sale of individual physical assets (if any) and the sale of intangible assets such as goodwill. You will need to tell TurboTax you've sold the business and then record the sale of any assets or goodwill.

To tell TurboTax you've sold the business in TurboTax Home & Business:

Go into business income and expenses and edit your business.
Under "Tell us about your business", check the box that says I sold (or disposed of) my business in 2017.
TurboTax will walk you through entering the information to report the sale of the business.

To tell TurboTax you've sold the business in TurboTax Business:

Under the "Business Info" tab, click on "About your Business"
When the program asks you "Did [company name] have a change of ownership during 2017?", check "Yes, there was a change of corporate ownership in 2017"
TurboTax will walk you through entering the information to report the sale of the business

The sale of goodwill is a capital asset and should be reported on Schedule D. You should also have Form 8594 completed (both buyer and seller do this and they should agree). If you do not file a correct Form 8594 by the due date of your return and you cannot show reasonable cause, you may be subject to penalties.

Per the IRS, The purpose of filing the form is "Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale if goodwill or going concern value attaches, or could attach, to such assets and if the purchaser's basis in the assets is determined only by the amount paid for the assets."

This form is not available for electronic filing, so you will have to mail in your return.

For further information about the form 8594, please refer to the instructions for IRS form 8594 at the following link:

https://www.irs.gov/instructions/i8594.

K

KennethBAnswer

The sale of a business is comprised of the sale of individual physical assets (if any) and the sale of intangible assets such as goodwill. You will need to tell TurboTax you've sold the business and then record the sale of any assets or goodwill.

To tell TurboTax you've sold the business in TurboTax Home & Business:

Go into business income and expenses and edit your business.
Under "Tell us about your business", check the box that says I sold (or disposed of) my business in 2017.
TurboTax will walk you through entering the information to report the sale of the business.

To tell TurboTax you've sold the business in TurboTax Business:

Under the "Business Info" tab, click on "About your Business"
When the program asks you "Did [company name] have a change of ownership during 2017?", check "Yes, there was a change of corporate ownership in 2017"
TurboTax will walk you through entering the information to report the sale of the business

The sale of goodwill is a capital asset and should be reported on Schedule D. You should also have Form 8594 completed (both buyer and seller do this and they should agree). If you do not file a correct Form 8594 by the due date of your return and you cannot show reasonable cause, you may be subject to penalties.

Per the IRS, The purpose of filing the form is "Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale if goodwill or going concern value attaches, or could attach, to such assets and if the purchaser's basis in the assets is determined only by the amount paid for the assets."

This form is not available for electronic filing, so you will have to mail in your return.

For further information about the form 8594, please refer to the instructions for IRS form 8594 at the following link:

https://www.irs.gov/instructions/i8594.

P

progfx1

This answer is outdated. Also, the method described is only applicable if you actually sold your business entity, like selling the corporation or LLC. This solution doesn't work if you sold only your business assets (goodwill, customer base, tangible assets) but you still own the business entity.

L

lavawaters

Hello,

I have the exact scenario you describe in your answer. I have a single member LLC (sole proprietorship for tax purposes) that I sold off a web-based software product to another company, but I still kept my LLC and use it for other business. How would I account for this? It seems Form 8594 is only used for selling all the business's assets and shutting it down. Do I still use Form 8594 to report selling the software product/brand?

D

dellag

Hello - I am using Turbo Tax for Business. My S Corp business sold during 2019 for which I received a payment for inventory and goodwill. All other assets are fully depreciated. Turbo Tax for business doesn't seem to be prompting me for form 8594 or for Schedule D (isn't that where I should be reporting the gain)? Or, do I only report the gain on my personal tax return 1040 and file the 8594 separately?

Critter

Employee

The form 8594 is informational to the seller and buyer ... using the info on that form will help you retire your assets by selling them off, the inventory is sold by adding that amount as income and the goodwill must be added as an asset so you can sell it. If you are unsure on how to do any of this you can call support for specific instructions or seek local professional help for this final return.

D

dellag

Thank you kindly for your response. I added the goodwill as an asset value of $47k (agreed to in the contract sale document) and indicated the "asset" was acquired at the business inceptions (so that it can be considered long-term) with a acquisition cost of $0. However, this then reports the gain as a 1231 asset on my 199A. I don't think this is correct. What am I missing?