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I have a client who sold their landscaping business in 2020, I am wondering how to classify the income he received that is associated to the client base and existing accounts. Basically the business was around for several years, had a bunch of current and recent clients, plus the trucks and equipment. So I have the vehicles and equipment all set but not quite sure how to classify the remaining sales income that would cover the existing client accounts. Thanks.
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What does the sales agreement say? How are you going to complete the Form 8594?
Here's wishing you many Happy Returns
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@Jen16 wrote:
how to classify the income he received that is associated to the client base and existing accounts.
Sale of a client list/goodwill/ongoing concern is a capital gain. So you create an Asset Entry Worksheet with $0 of Basis, and report the sale in the disposition area.
As George mentioned, be sure you fill out Form 8594 to show the allocation of the assets.
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Thank you!
