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USTaxAdvising
USTaxAdvising, CPA
Category: Tax
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Experience:  US Taxation specialist.
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hi i have the following question. A s corporation that has

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hi i have the following question. A s corporation that has been stablished for a while and the acitivy is a dental office. last year in june the sharholder opened a second location and spent about $42000 on remodeling, and office equipment. then the corporation sold the second location for $36000. how would we treat the sale of this practice on the corporation.

USTaxAdvising :

Hello, Thank you for using justanswer. I can assist you with your questions today.

USTaxAdvising :

The sale of the second location and it's assets would be a business loss. (ordinary in character, not capital loss)

USTaxAdvising :

Basically it would just be like an expense to the corporation.

USTaxAdvising :

Resulting in a 6,000 ordinary loss.

USTaxAdvising :

The assets would be taken off the books and the remaining 6,000 would be recorded in an account called "loss on sale of location XX"

USTaxAdvising :

make sense?

USTaxAdvising :

please let me know if something is not clear or if you have any follow up questions.

USTaxAdvising :

best regards,

Customer:

Hi so should I show the total sale price on form 1120s?

Customer:

and if so would i lump up the $42000 under one category and if so what would be the category.

USTaxAdvising :

The total sales price would be recorded on Form 4797 Part I (assuming the property was held for more than 1 year) see Form here - www.irs.gov/pub/irs-pdf/f4797.pdf‎


USTaxAdvising :

Then the net gain loss from Form 4797 is reported on line 9 of the 1120

USTaxAdvising :

So the total sales price is reported on column (d) Part I of the 4797. The cost or basis (42,000) is reported in column (f) and the net loss reported in column (g).

Customer:

the property was held less than a year. what form would i use it for that. thank you.

USTaxAdvising :

It would still be the 4797 form but Part II instead of part I

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