Hi and welcome to Just Answer!I will address your tax questions.1. How do I report the income from this sale on my personal income taxes?On your tax return - you will report proceeds from the sale of your shares of S-corporation.The gain will be reported as a capital gain and will be reduced by your basis in these shares.It is reported on form 8949 - Part II (assuming you held shares more than a year) - http://www.irs.gov/pub/irs-dft/f8949--dft.pdf - box "C" in the header should be checked.Then - amounts will be transferred to schedule D - http://www.irs.gov/pub/irs-pdf/f1040sd.pdfIn additional - S-corporation will issue schedule K-1 reporting your pro-rata share of income or loss - that is reported on schedule E.
2. The payment for my share of the business was broken down into two installments. One was received immediately, and the other will be paid in March 2013. The purchase agreement for this sale lists the total amount as well as the fact that payments will be broken up into two payments. Do I report the entire income from the sale for 2012, or can I report the portion that will be paid in March on my 2013 income taxes.You need to report the entire amount in the year of the sale. The sale of shares is not eligible for installment payment treatment even if part of proceeds were paid in following years.
See for reference this publication - www.irs.gov/pub/irs-pdf/p537.pdf