Business Starting Grants

Selling Business?

What form should we use to report the capital gain from selling a business (We have been filing scheduel C).

Public Comments

1. Assuming that your business is a sole proprietorship, then this is bad news, but it's a fact: for US tax purposes, you are not selling a "business". Instead, you are selling a variety of assets, which may include inventory, furniture, customer lists, business name, phone number, etc. etc. The purchase price of your business has to be allocated to each of these kinds of assets. Some assets will be taxed as capital gains and others will be ordinary income. Each of these assets is reported separately on various forms and schedules. If the price of your business is anything but trivial, then only a competent tax professional (attorney or accountant) should advise you. Good luck.
2. Form 4797. I've included a link to the 2006 form and also the instructions for the form.