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- Sale of Scorp assets with a loss
Sale of Scorp assets with a loss
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beercpa
Level 1
08-05-2025
05:23 PM
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I have a client who sold his Scorp assets for $800,000. The sales agreement indicates that $191,000 was allocated to FF&E and $5,000 to inventory. The remainder was not specified but I would allocate it between goodwill and covenant not to compete. How would this be reported if the client has stock basis of $1,500,000? I think it should be a loss, but can it be treated as an ordinary loss? If so, how does that look on the return?
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3 Comments 3
sjrcpa
Level 15
08-05-2025
05:32 PM
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The sale of the assets gets reported on the 1120S. Gain/loss is on the K-1.
$800,000 is a distribution on the K-1 (or whatever amount was actually distributed to shareholder)
The stock basis is adjusted for the recent transactions. If S corp was dissolved, Gain/loss on the stock goes on Schedule D of the 1040.
The more I know the more I don’t know.
Accountant-Man
Level 13
08-06-2025
11:09 AM
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I question the stock basis value of $1,500,000.
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