The sale of a business usually is not a sale of one asset. Instead, all the assets of the business are sold.
Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss.
When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade.
The gain or loss on each asset (or a group of similar assets) is figured separately.
The sale of capital assets results in capital gain or loss.
The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction.
The sale of inventory results in ordinary income or loss.
The sale of self-created intangible assets is taxed as ordinary income.
Liabilities assumed by the purchaser is treated as cash payment.
Generally, both the purchaser and seller must file Form 8594 and attach it to their income tax returns when there is a transfer of a group of assets that make up a trade or business and the purchaser s basis in such assets is determined wholly by the amount paid for the assets.
So - we need to start with a list of assets - and will need to assigned a sale price to each asset - as agreed between parties.Then - we will determine the gain or loss on each asset separately and separately will determine how that gain or loss is treated.
To calculate the gain separate for each asset - we should take (assumed sale price) MINUS (adjusted basis) = gain
Here is the form to use
For the real estate - we need to know your adjusted basis - so we may estimate your gain or loss.
For the practice and contents - we need a list of items. allocated sale price, and the basis for each item.
If you briefly describe assets, their selling prices and basis - we may verify the gain and how that gain is taxed.