Hi All,
I have a new client this year who is a veterinarian and he and his partner/shareholders sold their business to another veterinarian business last year. This is the first business sale transaction I've had to report so I'm looking for some guidance.
Here are the details:
5-person veterinary office, incorporated in Delaware
Client purchased stock originally in 1994, then bought out another veterinarian in 2007
The business was sold to a professional corporation in 2015
Business continues to operate and client is continuing to work as a veterinarian in the new business
Client received $610,000 for his share of the business, his cost was $132,307.
I am NOT doing the business tax return, I'm only doing the individual return for this person. He says that he sold shares of stock, not business assets (stock purchase agreement confirms that he sold his shares of stock in the company). He also says the sale of the stock is a long term capital gain transaction.
Questions:
1. He gave me a copy of the stock purchase/sale agreement, bank statement showing the deposit of the amount he received, and amortization schedules showing how much he paid for the shares that he purchased in 1994 and 2007. However, he did not give me a 1099 or K-1. I was expecting one of these documents. For a C Corporation, I believe he should receive a 1099 for the sale of his shares of the company. Is this correct?
2. Is this long term capital gains or ordinary income?
3. Does this qualify as sec 1202 qualified small business stock and the 50% exclusion?
Thank you in advance for any help with this one, feeling a little overwhelmed right now
Kristine
I have a new client this year who is a veterinarian and he and his partner/shareholders sold their business to another veterinarian business last year. This is the first business sale transaction I've had to report so I'm looking for some guidance.
Here are the details:
5-person veterinary office, incorporated in Delaware
Client purchased stock originally in 1994, then bought out another veterinarian in 2007
The business was sold to a professional corporation in 2015
Business continues to operate and client is continuing to work as a veterinarian in the new business
Client received $610,000 for his share of the business, his cost was $132,307.
I am NOT doing the business tax return, I'm only doing the individual return for this person. He says that he sold shares of stock, not business assets (stock purchase agreement confirms that he sold his shares of stock in the company). He also says the sale of the stock is a long term capital gain transaction.
Questions:
1. He gave me a copy of the stock purchase/sale agreement, bank statement showing the deposit of the amount he received, and amortization schedules showing how much he paid for the shares that he purchased in 1994 and 2007. However, he did not give me a 1099 or K-1. I was expecting one of these documents. For a C Corporation, I believe he should receive a 1099 for the sale of his shares of the company. Is this correct?
2. Is this long term capital gains or ordinary income?
3. Does this qualify as sec 1202 qualified small business stock and the 50% exclusion?
Thank you in advance for any help with this one, feeling a little overwhelmed right now
Kristine