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I have an S Corp that I sold to someone in an installment…

I have an S...

I have an S Corp that I sold to someone in an installment agreement. I have not received any payment from that person in over two years and am not likely to see anything else. The sale basically consisted of a customer list so there is nothing to reposes. How do I close out the installment sale with the IRS and can I claim the uncollected money as a loss?

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Answered in 10 minutes by:
3/8/2018
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,406
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Dear Customer,

There are two aspects to the issue, actually, three.

1) To reverse the gain you originally reported to the IRS. If you use the installment sales method to have recognize long term capital gain before, if you over-report, you either amend that tax return, or reverse the capital gain in this year.

If you did not over report, there is no loss in this deal for you at this point.

2a.) If the money you did not receive was not reported as capital gain before, there is no loss for that money to report on your tax return.

2b.) However, if your original investment to the S corporation versus the previous installment payments you received is with a loss, you can report long term capital loss.

3) It is recommended that you consider to make collection effort on the remaining sales proceeds and/or to sell this customer list to someone else. Then, after both efforts are made, you can decide how much is your capital loss on this S Corporation, if any.

Please feel free to follow up.

Regards,

Fiona

Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,406
Experience: Former IRS Revenue Agent
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