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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15711
Experience:  15years with H & R Block. Divisional leader, Instructor
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I sold a small business after operating it for 35 years I

Customer Question

I sold a small business after operating it for 35 years I was planning on using the sale for retirement is it possible to purchase rental property as a deduction, I sold for 280k I don't have papers to show I actually put that much into the company.
JA: The accountant will know how to help. Is there anything else important you think the accountant should know?
Customer: i am retired and so is my wife we only have social security for retirement.
Submitted: 11 months ago.
Category: Tax
Expert:  Robin D. replied 11 months ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  Robin D. replied 11 months ago.

The purchase of the rental would not reduce the gain on the sale of the business unfortunately.

Rental is a deduction though once the property is available for rent. The purchase p[rice of the rental is taken a percentage each year and not all in the year of purchase. You are allowed to depreciate the rental over 27.5 years if residential so your purchase price would not be immediately recouped.

Customer: replied 11 months ago.
would my tax rate be 15% of total sale I live in texas . what can I deduct as original price or ?
Expert:  Robin D. replied 11 months ago.

A business usually has many assets. 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 is figured separately. The sale of capital assets results in capital gain or loss.

The sale of a trade or business for a lump sum is considered a sale of each individual asset rather than of a single asset. If you sold something with the business that you depreciated then you must reduce your cost for the by the depreciable amount to calculate your gain.

Your tax rate would then be known.