How much tax must be paid to Uncle Sam after selling a business owned by hubby?

Dear Tax Talk,
I sold a business my husband had for $60,000 and I desperately need to know about how much I will have to pay in taxes from this amount. Please let me know how much tax must be paid after selling a business. And thank you.
— Kerry

Dear Kerry,
When a business is being sold, it is time to see a qualified tax professional to help you understand the tax ramifications of the sale. It is even better for you to have guidance ahead of selling a business — before the transaction is closed.

You have not provided enough details at this point, so I am going to give you general information that may help you figure out what you need to do.

What you need before meeting a tax pro

First of all, the tax pro will want to know why you sold the business and not your husband. If you inherited the business from your husband, that may come in to play as far as calculating the gain on the sale.

Secondly, the tax pro will need to know the business’s entity type, which can be determined by reviewing the tax forms the business used to report its income and expenses. For example:

• Was it a sole proprietorship that reported its income and expenses on Schedule C of your Form 1040?
• Or was the business incorporated, which required filing a separate corporate income tax return?

The most recent tax form filed for the business is an important document to have for the calculation.

What type of assets did you sell?

Moving on, you will need to know what assets the business sold. A business can have tangible assets, such as furniture, fixtures and equipment, as well as intangible assets, such as a customer “book of business” or “goodwill.”

Depending on what was sold, some of the income may be taxed at more favorable capital gain tax rates and some may be taxed as ordinary income.

There are two more important items to bring to your meeting: your most recent tax return, as well as a copy of the closing statement for the sale of the business.

My suggestion is that you contact someone as soon as possible because tax season is right around the corner and tax professionals get very busy then.

Congratulations on the sale and all the best to you!

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