tax question...thinking of selling, can I take a loss on the sale of my business?

Question

this is considered an asset sale, selling it for less than I bought it. Can I claim a loss on my taxes? And since I haven't paid myself back for the money I put into the business when I purchased it, can I pay myself back and not be taxed? It's set up as a corp. and I have taken the depreciation on equipment. What's my personal tax liability?

Answer 1

You need someone to go over your assets and depreciation taken to determine if you have a loss or not.

If you purchased an item for $5,000 and have taken $3,000 depreciation, and you sell it for $3,500, you have a gain, not a loss, even though you sold the item for less than you paid for it.

$5,000 - $3,000 = $2,000 is your adjusted basis
$3,500 - $2,000 = $1,500 gain

You would complete Form 4737 to figure your gain or loss on the sale of a business asset.

Dissolving a corporation may require that you retain an attorney who understands the federal and state requirements you must meet.

Answer 2

If you sell the corporation, you must report a gain or loss on the sale of the stock. Remember that any cancellation of any debts owned to you by the corporation would adjust the sale price. If the corporation sells the business (because many people are afraid of hidden or potential liabilities such as future lawsuits inside the corporation as a result of past acts), the corporation would have to allocate the selling price to the various assets and report a gain or loss on the individual asset categories. .I do not think that losses on depreciable personal property (chattels) are deductible.