Question

Report the sale of my business

Forum|Forum|3 years ago
May 5, 2022
1 reply
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I sold my sole proprietorship in 2021 and need to report the proceeds of the sale. However, I understand it's not taxed as regular business income. How do I go about this?

TurboTaxSusan

If your business was not incorporated, then you aren't really selling the business, you are selling the assets. This means that you would enter any fixed asset as a disposition in the CCA section and check off “No assets left in class” to show that there is nothing else left in the class pools. You would also report zero for your end inventory, if applicable.

If you received more money than your tangible assets were worth, this is called “goodwill”. You would also enter this in the CCA section as an addition to Class 14.1 (5%). Since you likely don’t already have a value for the goodwill of your company, you can enter the cost as $1.

Then you can enter in goodwill again, this time as a disposition to Class 14.1. For the disposition you would enter the amount that you were paid for your business that was more than your tangible assets were worth. Again, check off “No assets left in class” to show that there is nothing else left in Class 14.1.