How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Gerri A Harrison CFP EA Your Own Ques...

Gerri A Harrison CFP EA
Gerri A Harrison CFP EA, Enrolled Agent
Category: Tax
Satisfied Customers: 252
Experience:  27 years of preparing income tax returns - both personal and small business
21040383
Type Your Tax Question Here...
Gerri A Harrison CFP EA is online now
A new question is answered every 9 seconds

I sold my business for 60k.(40 cash 25 note w 9in brokers fees.)

Resolved Question:

I sold my business for 60k.(40 cash 25 note w 9in brokers fees.) In the sales doc we allocated the sale as ppe 10, goodwill 35 and non compete 20. The buyer defaults before the end of the year. So I'm going to recognize the sale as the 40 in cash with 9 in brokers fees. How should i allocate the sale for tax purposes. I have 177 in assets w accum dep of 63. I intangible assets of 12.
Submitted: 3 years ago.
Category: Tax
Expert:  Gerri A Harrison CFP EA replied 3 years ago.

Gerri A Harrison CFP :

Since you initially sold it for $60 with equipment and intangibles and will now get $40 - you would allocate it as 66 2/3 of what you would have initially allocated. For example the ppe would now be 6.6k, the goodwill would be $23k and the non-compete would be $10.4k.

Gerri A Harrison CFP :

On each piece of equipment to determine the applicable percentage - take the total FMV of all equipment assets. Say that is $100k. If equipment X is $5k in FMV that represents 20% of the total so you would allocate 20% of the equipment sales price to that piece of equipment. The same is true of the intangibles, what percentage of FMV are each of the 12 assets.

Customer:

Is the goodwill and non compete considered income? Is the broker fee just expensed?

Gerri A Harrison CFP :

Goodwill and non-compete are considered income. If you sold a sole-prop then the broker fees are just expensed. If you sold a partnership or corporation then you would use the broker fees as of your basis against that income.

Customer:

I'm a single owner s-corp. so is it expensed.

Gerri A Harrison CFP :

That would be correct. So you just need to take the cash received and allocate it between the goodwill, non-compete and equpment. The equipment sales will be on the Form 4797 when you prepare your taxes. The income from the good will and non-compete will be reported on on line 21 of the Form 1040 as miscellaneouse income.

Customer:

So the goodwill is reproted on my personal return not with the 1120s filings. How do I account for the unamortized start-up cost which includes franchise fees? Do I net it against the proceeds allocated towards goodwill?

Gerri A Harrison CFP :

Did you sell the assets of the corporation or did you sell the corporation itself by selling the stock?

Gerri A Harrison CFP :

If you sold the assets, then all the sale is reported on the corporation tax return. If you sold the stock itself and the corporation now belongs to another then you would be reporting the income on your personal tax return

Customer:

sold the assets. I have about 10k of unamortized start-up cost. Do I write that off

Gerri A Harrison CFP :

I am going to opt out at this point - this is not a quick answer and everytime I answer one question, you have another. These really should be multiple questions ar at a rate of more than $16

Customer:

Thats fine. I thought I purchased unlimited use from just answer. I quess I should discuss that with them

Gerri A Harrison CFP EA, Enrolled Agent
Category: Tax
Satisfied Customers: 252
Experience: 27 years of preparing income tax returns - both personal and small business
Gerri A Harrison CFP EA and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.