Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I was a 50% owner in a North Carolina S-Corp, along with another

50% owner. In mid-2012, I...
I was a 50% owner in a North Carolina S-Corp, along with another 50% owner. In mid-2012, I sold my 50% share in this S-Corp to my partner. I received 50% of the operating income year to date and an additional premium. I have two questions:

1. How do I report the income from this sale on my personal income taxes? I am filing my state taxes in North Carolina.

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.

Thank you!
Show More
Show Less
Ask Your Own Tax Question
Answered in 6 minutes by:
1/20/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,658
Experience: Taxes, Immigration, Labor Relations
Verified

LEV :

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.pdf
In additional - S-corporation will issue schedule K-1 reporting your pro-rata share of income or loss - that is reported on schedule E.

LEV :

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.

LEV :

See for reference this publication - www.irs.gov/pub/irs-pdf/p537.pdf

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,658
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Some additional clarification - see here - www.irs.gov/pub/irs-drop/n-00-26.pdf
Q-1: Can the shareholder report on the installment method the gain arising from a sale of the shareholder’s stock in the corporation in exchange for cash and an installment obligation?
A-1: The shareholder can report the gain from the sale of the stock on the installment method.
So while you cannot use the installment method to report gain from the sale of stock or securities traded on an established securities market - still for the non-publicly-traded corporation - the installment method is allowed.
Sorry for confusion - let me know if you need any help with reporting.
Ask Your Own Tax Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,658
30,658 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

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

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.WMatteson, 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.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, 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.

OrvilleHesperia, 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!!!!

AlexLos 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.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
If my husband and I file our income taxes married, filing
If my husband and I file our income taxes married, filing separately, can we alternate who gets to claim things like property tax deduction? We live together in the same home.… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
What are the forms for reporting Rental Income to the IRS on
What are the forms for reporting Rental Income to the IRS on foreign properties - we collect each month? Is this filed separately from our personal returns?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
I am widow,do not file income tax because income is low and
I am widow,do not file income tax because income is low and no taxes withheld. I do own a home which my adult daughter shares with me. She pays all house expenses inlue of rent, these equal half of mo… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
What form do I use to send realestate capital gains payment.
What form do I use to send realestate capital gains payment … read more
Tax.appeal.168
Tax.appeal.168
Principal
13 satisfied customers
On form 1041, capital gains have to be taxed at the estate
On form 1041, capital gains have to be taxed at the estate level, correct? No distribution deduction may be taken?… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
37 satisfied customers
Is there a form to file with the IRS for tax periods that
Is there a form to file with the IRS for tax periods that have ran past the statute of limitations from the date of assessment … read more
Lev
Lev
Tax Advisor
30,658 satisfied customers
On Form 706 Schedule D, if the proceeds were paid directly
On Form 706 Schedule D, if the proceeds were paid directly to a funeral home to pay for funeral expenses should the face value of the policy be included on this schedule? Also should the funeral expen… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
37 satisfied customers
FOR GUILLERMO: What line on the 1040 income tax return is
FOR GUILLERMO: What line on the 1040 income tax return is used to determine the sponsor's income for Form I-864? Is it line 22: TOTAL INCOME? Or, line 37, ADJUSTED GROSS INCOME?… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
37 satisfied customers
This is a question on a UK resident's personal income tax on
This is a question on a UK resident's personal income tax on lump withdrawals of funds in a Canadian RRSP using an example with funds expressed in $CAN. Value of lump sum payment from the RRSP is $100… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
I am completing my personal income taxes. For this filing
I am completing my personal income taxes. For this filing year, I left my corporate career to manage my real estate full time. Therefore, the real estate is moving from a passive activity to an active… read more
Lev
Lev
Tax Advisor
30,658 satisfied customers
I have a schedule e form that I filed for extension (2016).
I have a schedule e form that I filed for extension (2016) . I attempted to send in time online but was thwarted by my own incompetence to follow directions basically. I saw that if I used a free form… read more
Lev
Lev
Tax Advisor
30,658 satisfied customers
Is real estate income taxed only in the state they are
Hi. Is real estate income taxed only in the state they are generated in? For example, if someone owned investment real estate in Texas that has a 0% state income tax and lives in Pennsylvania, would t… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I filed for an extension to file my 2017 income tax return.
I filed for an extension to file my 2017 income tax return. I recently suffered a stroke - 6 weeks ago - and have been unable to finalize my return. I should be able to file it within the next 30 days… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
NYS can collect personal income tax for 20 years? But the
Hi - So NYS can collect personal income tax for 20 years? But the Fed can only collect for 10? … read more
Tax.appeal.168
Tax.appeal.168
Principal
13 satisfied customers
I received a Schedule K-1 (Form 1041) from my aunt's estate
I received a Schedule K-1 (Form 1041) from my aunt's estate from which I received a distribution. In Part 3, Beneficiary's Share of Current Year Income, Deductions, Credits, and Other Items, there is … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
How do I request my 2016 Individual Personal Income Tax form
Sir, how do I request my 2016 Individual Personal Income Tax form (form 1040) on line? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
THE irs STATED THAT TE TAXCALULATED ON SCHEDULE D WAS
tHE irs STATED THAT TE TAXCALULATED ON SCHEDULE D WAS INCORRECT . i CAN NOT ACCERSS dD. p;EASE DVISE HOW I CAN ACEESS THE SCHEDULE … read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
37 satisfied customers
I have a schedule K-1 Beneficiary's share of income,
I have a schedule K-1 Beneficiary's share of income, Deductions, Credits, etc. Line 5 shows 31,171, line 14 code E shows 1092, line 14H shows -30186. Do I owe tax on 31171 or just 1092. … read more
Lev
Lev
Tax Advisor
30,658 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x