Sell of a C-Corp

[Maribeth-Martin]

I have a client who sold his C-Corp this Tax year. As he sold it I received a copy of the contract to find out what the sells price was and how it was broken down. I asked for a copy of the contract when he purchased it. Now I am finding out that the purchase price involved 1-asset (a trailer), stock and goodwill. He has owned the business long enough that to go back and amend the tax returns is impossible.  So do I report the stock sells on his personal 1040 and show the asset sell on the 1120?

What about reporting the goodwill? Where so I report it?

Thank you,

[IRonMaN]

Stock sale - 1040

Asset sale - 1120

Goodwill - sounds like he sold personal goodwill and if so 1040

[Maribeth-Martin]

How do you distinquish between personal and business goodwill?

[Terry53029]

Personal goodwill would be the owner is the face of the company, and most of the goodwill is the business he brings in just because he is good. Business good will would be like a brand name is what brings in the business, like Dunkin Donuts, people come in because of the name of the business not the store owner

[Maribeth-Martin]

Ok makes sence. Do I report the goodwill for the business as a capital gain on the 1120?

[dkh]

[jeffmcpa2010]

Follow the $$$

If the $$ went directly to your client, then the sale is on the 1040. 

If the $$ went to the Corporation (IE the purchaser bought the assets of the Corporation) then the sale would be reported on the 1120, with any distributions (or liquidating distributions) at least partially reported on the 1040. (Hence the infamous term related to corporate taxation of "Double Tax")

PS. If your client sold the "Stock" of the corporation...it is the new owner who will be filing the 1120.

[IRonMaN · Accepted solution]

"If your client sold the "Stock" of the corporation."

Which isn't exactly clear at this point.

[Maribeth-Martin]

Thank you all for the help. Just what I needed to get this client taken care of.