Sale of Business Property
The most frequently asked tax questions related to Sale of Business Property
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Answer Tax QuestionsLike kind exchange - Partnership Interest Does Not Qualify
Asked Tuesday, June 26, 2012 by an anonymous user
Exchanges of partnership interests do not qualify as nontaxable exchanges of like-kind property. This applies regardless of whether they are general or limited partnership interests.
Dispositions of Intangible Property
Asked Tuesday, June 26, 2012 by an anonymous user
Intangible property is any personal property that has value but cannot be seen or touched. It includes such items as the goodwill value of a business, patents, copyrights.
Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss.
Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset.
Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss.
Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset.
Property sale - receiving payments in future years
Asked Tuesday, June 26, 2012 by an anonymous user
You may elect to report the sale on IRS Form 6252 which spreads the tax liability on the gain over the life of the installment period.
You may elect not to use the installment method if you want to report the entire profit in the current year of sale.
You may elect not to use the installment method if you want to report the entire profit in the current year of sale.
Long term - Holding period - Sale of business assets
Asked Tuesday, June 26, 2012 by an anonymous user
The long term holding period is more than one year. The short term holding period is one year or less.
The significance of this determination is that gains on long term assets benefit from lower tax rates.
The significance of this determination is that gains on long term assets benefit from lower tax rates.
What are Business Assets?
Asked Tuesday, June 26, 2012 by an anonymous user
Business assets are things of value that are used in a business. The assets are of two types:
Tangible assets, Cash and Receivables, Inventory like business vehicles, equipment, supplies, and buildings.
Intangible assets, like goodwill copyrights, patents, and trademarks.
Tangible assets, Cash and Receivables, Inventory like business vehicles, equipment, supplies, and buildings.
Intangible assets, like goodwill copyrights, patents, and trademarks.
Fair market value - Sale of business property
Asked Tuesday, June 26, 2012 by an anonymous user
Fair market value (FMV) is the price at which the property would change hands between a buyer and a seller when both have reasonable knowledge of all the necessary facts and neither has to buy or sell.
If parties with adverse interests place a value on property in an arm's-length transaction, that is strong evidence of FMV.
If there is a stated price for services, this price is treated as the FMV unless there is evidence to the contrary.
If parties with adverse interests place a value on property in an arm's-length transaction, that is strong evidence of FMV.
If there is a stated price for services, this price is treated as the FMV unless there is evidence to the contrary.
Amount realized - Sale of business property
Asked Tuesday, June 26, 2012 by an anonymous user
The amount you realize from a sale or exchange is the total of all money you receive plus the fair market value (defined below) of all property or services you receive.
The amount you realize also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage.
The amount you realize also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage.
Basis - Sale of business property
Asked Tuesday, June 26, 2012 by an anonymous user
You must know the basis of your property to determine whether you have a gain or loss from its sale or other disposition.
The basis of property you buy is usually its cost minus any depreciation taken.
However, if you acquired the property by gift, inheritance, or in some way other than buying it, you must use a basis other than its cost.
The basis of property you buy is usually its cost minus any depreciation taken.
However, if you acquired the property by gift, inheritance, or in some way other than buying it, you must use a basis other than its cost.
Gain or Loss from Sales and Exchanges
Asked Tuesday, June 26, 2012 by an anonymous user
You usually realize gain or loss when property is sold or exchanged.
A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. A loss is the adjusted basis of the property that is more than the amount you realize.
A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. A loss is the adjusted basis of the property that is more than the amount you realize.
