My wife and I bought a business in 2007. We sold it last year. How should I report the transaction? Should it be entered in quickbooks or TurboTax-Business? Any guidance is grately appreciated.
Welcome to the Community, @TK39. Let me share the steps to record your sold business.
You can record the income as a bank deposit in your QuickBooks Desktop account.
Before making a deposit, you need to put the transactions you want to combine into the Undeposited Funds account.
You're ready to record the deposit in QuickBooks after you have your bank's deposit slip.
I'm also adding this article as your reference in the future in reconciling your accounts: Reconcile an account in QuickBooks Desktop.
Let me know if I can be of additional assistance. I'm always around to help.
You really need the assistance of a CPA. Was it a stock sale or an asset sale? What is the breakdown of the purchase price? Was there inventory? Equipment? Goodwill? Non-compete? Seller financing? What assets were sold and the basis of those assets and any liabilities assumed and/or seller financing all go into how to record the transaction. This really isn't the best forum for your question IMO.
Thanks Rainflurry for getting back to me. It is a very small business. A pet grooming salon. No stock sale, just asset and goodwill sale. The breakdown of purchase price of 105,000 is:
Asset + equipment = 20,000 We agreed to put 20,000 for all assets and equipments together.
Non-compete agreement = 10,000
Goodwill = 75,000
Expense - Brokerage fee = 10,000
I bought the business on 2007 for 65,000
As per instructions for form-8549, I had to combine goodwill and non-compete into class-VI assets.
We had little bit inventory that we didn't charge for.
No seller financing, cash down. No liability assumed.
When you purchased the business, was part of the purchase price allocated to goodwill? If so, what was your basis in goodwill (cost less amortizaion) when you sold the business?
What is your basis (original cost less depreciation taken) in the assets/equipment you sold for $20K?
How much inventory was on the books when you sold the business?
Also, goodwill is a class VII asset, whereas a non-compete is a class VI asset.
When I purchased, the allocation was:
I never amortized the goodwill or non-compete. I never amortize anything, sorry.
My current basis of assets/equipments is $422.
We had about $100 worth of inventory.
You need to contact a CPA at this point. If you never took amortization on the goodwill, you may have to recapture the amortization as if you did take it. This could cause a large tax liability on the $50K of the goodwill paid on the purchase price. This is not something to try and navigate yourself. It will be well worth your time and money.