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Owner of a DBA sold business split proceeds as part of a divorce

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Level 3
last updated ‎June 03, 2020 9:24 AM

Only asset identified in sale was inventory, will be subject to SE Tax - will assign FMV to the equipment.  He had to split proceeds with ex wife, any way to mitigate the tax impact to him?

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Level 3
last updated ‎June 03, 2020 9:24 AM

Sorry it took so long to respond.  Just heard back from the client.  The divorce came after the sale.  Now that I have the papers in hand, each one is responsible for their own share of capital gains.The sale included inventory at cost, $20K for F&F and the rest is "blue sky".

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Level 15
last updated ‎June 03, 2020 9:24 AM

If it is his business instead of jointly owned ------- no.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 10
last updated ‎June 03, 2020 9:24 AM

Which came first, the divorce decree or the sale?  What does the decree say?  If the only asset identified in the sale is the inventory, why is there also equipment involved?  Does the buyer know he's paying more for the inventory than the seller paid for it?  If that's not a red flag, it's at least a raised eyebrow.  

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Level 3
last updated ‎June 03, 2020 9:24 AM

Sorry it took so long to respond.  Just heard back from the client.  The divorce came after the sale.  Now that I have the papers in hand, each one is responsible for their own share of capital gains.The sale included inventory at cost, $20K for F&F and the rest is "blue sky".

View solution in original post