Bill in Advance, Sold Business

Forum|Forum|1 year ago
April 9, 2024
1 reply
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I billed my clients quarterly in advance, Nov-Jan, Dec-Feb (rolling quarters). I sold my business to another firm effective 1/1/2024. So the 1099-NEC I received from my custodian shows income for Jan-Feb 2024 that belonged to the new firm. How can I account for this on my Schedule C so my income isn't overstated?

TurboTax Home & Biz Windows

MinhT1

You'll issue a form 1099-NEC to the new firm for the amount of fees that you transferred. This'll allow you to deduct that amount from your income.

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LifeinPTCAuthor

Thanks for the quick reply! Do you mean issue them a 1099-NEC for 2023? Where do I enter this in TurboTax so that it comes off my income?

LeticiaF1

You should report this on your Schedule C as an expense. IT could go under the Other Expenses section, and write a description like advance transfer or fee transfer. To enter this in TurboTax:

Open or continue your return.
Go to Wages & Income
Select Edit/Add next to Self-employment income and expenses
Select Edit under your business
Select Add Expenses for this work
Scroll down to Other miscellaneous expenses, select the box, and Add it
The program will take you back to the main expense list, select Start next to Other miscellaneous expenses
Enter a description and the amount of the expense.