Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

I have a client selling his business - a Single Member LLC…

Customer Question
Second opinion] I have...

Second opinion] I have a client selling his business - a Single Member LLC filing as an S-Corp. Allocation is Fixed Assets $140,000 Goodwill $560,000 Payment is $300,000 at closing, $250,000 Note Payable over 5 Years AND $150,000 Common Stock in Buyer's Corp.

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

How do I record all this? Have heard Sec 721 allows for him to NOT report/pay taxes on the $150K stock until he sells it?

Submitted: 2 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 22 hours by:
12/19/2017
Tax Professional: Lev, Tax Advisor replied 2 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 31,220
Experience: Taxes, Immigration, Labor Relations
Verified

Here is section 721

https://www.law.cornell.edu/uscode/text/26/721

(a) General rule

No gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership.

(b) Special rule

Subsection (a) shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of section 351) if the partnership were incorporated.

So far - that section has NO relation to selling the business and not related to your situation.

.

However - in this situation we have an installment sale...

An installment sale is a sale of property where you'll receive at least one payment after the tax year in which the sale occurs. You're required to report gain on an installment sale under the installment method unless you "elect out" on or before the due date for filing your tax return (including extensions) for the year of the sale.

Under the installment method, you include in income each year only part of the gain you receive, or are considered to have received. You don't include in income the part of the payment that's a return of your basis in the property. Use Form 6252, Installment Sale Income, to report an installment sale in the year the sale occurs and for each year you receive an installment payment.

Questions?

Ask Your Own Tax Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 31,220
31,220 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

1,312 satisfied customers

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

Richard

Richard

Tax Attorney

4,362 satisfied customers

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

Robin D.

Robin D.

Senior Tax Advisor 4

14,120 satisfied customers

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

Megan C

Megan C

Certified Public Accountant (CPA)

8,652 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
I own a rental property under an LLC partnership. I am in
I own a rental property under an LLC partnership. I am in the middle of filling my Form 1065, 8825, 4562. I need to enter assets that I installed in the rental property in 2017. I installed a water he… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
Installment Sale vs Mortgage Taxpayer owns a piece of real
Installment Sale vs Mortgage Taxpayer owns a piece of real estate and plans to sell to a non-related individual. Taxpayer will hold the note on the sale. Does that automatically make it an installment… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
I have an LLC that was taxed as a partnership, with two
I have an LLC that was taxed as a partnership, with two members who each owned 50%. My partner is leaving the partnership (as of 12/31/17) and I would now like to continue as an LLC with a sole propri… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,058 satisfied customers
I have an LLC that's taxed as a partnership, and my partner
I have an LLC that's taxed as a partnership, and my partner will no longer be involved. I want to switch it to an LLC taxed as a sole proprietorship. This change took place on 1/1/18. For my 2017 taxe… read more
abci168
abci168
Principal
27 satisfied customers
Installment Sales / Rent to own A taxpayer has several
Installment Sales / Rent to own A taxpayer has several rental properties. 1. A couple properties are listed on their tax return as an installment sale and are being handled properly, recording interes… read more
abci168
abci168
Principal
27 satisfied customers
Can an LLC (partnership) pay taxes on income and avoid the
Can an LLC (partnership) pay taxes on income and avoid the partners having to pay the taxes?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
I am filing the taxes for our LLC. We are a partnership of 4
I am filing the taxes for our LLC. We are a partnership of 4 people. These are taxes being filed late since they are for the 2016 year. We were mistaken into thinking that we would not have to report … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
I have an LLC in CA. Originally it was a partnership, filing
I have an LLC in CA. Originally it was a partnership, filing a 1065 to the IRS. Now, the other partners have left and I want to file as a single member LLC, flowing back into my schedule c. The change… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,058 satisfied customers
I sold the business assets in an installment sale. Proceeds
I sold the business assets in an installment sale. Proceeds were: … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I filed an extension on my tax return because I didn't know
I filed an extension on my tax return because I didn't know my tax credit. when do I need to have tis complete. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
14,120 satisfied customers
Penalty for late filing of partnership LLC tax return, not
Penalty for late filing of partnership LLC tax return, not eligible for Rev Proc 84-35 relief because one of the partners is a foriegner… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,058 satisfied customers
I have a penalty for late filing of partnership LLC tax
I have a penalty for late filing of partnership LLC tax returns and looking for examples of reasonable cause Reading about the FTA and checking if we could be eligible … read more
Carter McBride
Carter McBride
LLM
439 satisfied customers
For a ny state partnership tax return, if you file an
For a ny state partnership tax return, if you file an extension but don't pay anything and then end up owing a lot. Do they still recognize the extension or do they charge a failure to pay penalty (fo… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Rental real estate installment sale. Commercial rental real
Rental real estate installment sale.Commercial rental real estate (non related party transaction) has been owned/rented for over 10 years. It is owned 70% by individual and 30% by ROTH.Client is going… read more
Lev
Lev
Tax Advisor
31,220 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
4,058 satisfied customers
I have a question on Form 6252 Installment sale on Property.
Hi I have a question on Form 6252 Installment sale on Property … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,058 satisfied customers
Short Term Installment Sale. Client purchased a property,
Short Term Installment Sale. Client purchased a property, then sold for a gain in less than 1 year. The sale is an installment sale. My software is picking up the entire gain as ordinary income this y… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,283 satisfied customers
Installment Sales - A taxpayer owns rental property (over
Installment Sales -A taxpayer owns rental property (over several years). Taxpayer is selling rental property and will hold the mortgage for the purchaser. Will this be considered a straight sale, reco… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
14,120 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