Sales of properties

[Unregistered]

I have a client - Following are the detail.

(1) Leaved in CA until Aug 2005 - Moved to IL in sep 05
(2) Sold Pizza business A in CA in Nov 05
(3) Sold Pizza business B in CA in Nov 05
(4) Sold Pizza business C in CA in Nov 05
(5) Sold Rental property #1 in CA in July 05
(6) Sold Rental property #1 in CA in July 05
(7) Bought house in Illinois - Aug 05
(8) Sold house in CA in 2006 - Not an issue for 2005

Questions:
(1) #A,B,& C were sold togather as one price. I do have breakdown for each
Total sale price $260,000 plus $127000 of loan was assumed by buyer
Client gets installment for $260,000. Received two payments in 2005.

Should I take only these two payment into account or count entire amount?

(2) Client filed three sch c in 2004 - One fed id for all three pizza

Should I file three seperate sch c when accoutning for selling?

(3) I need to recapture dep.

(4) Divide land and bldg for rental

(5) Allocate sale price to each property on dep schedule for gain and loss

(6) Do part year res - CA

(7) Do part year IL - Res

Anyhting else?

Thanks!

[Armando Beaujolais]

You'll need a breakdown not only among the different businesses, you'll need a breakdown of how much was paid for each asset. There weren't just three businesses sold. Count up all the assets on the books and each one is a separate transaction.

Don't forget that assumption of a debt is treated like an exchange of cash. Amount realized in 2005 was the installment payments plus $127,000 debt relief.

You should get some good ideas on this board, but you have a lot of legwork to do on this.

[Unregistered]

You'll need a breakdown not only among the different businesses, you'll need a breakdown of how much was paid for each asset. There weren't just three businesses sold. Count up all the assets on the books and each one is a separate transaction.

Don't forget that assumption of a debt is treated like an exchange of cash. Amount realized in 2005 was the installment payments plus $127,000 debt relief.

You should get some good ideas on this board, but you have a lot of legwork to do on this.

Is this considered installment sale becuase he is receiving money every month. I would rather treat as NON installment sale for Pizza businesses.

[Unregistered]

Does this sound right?

If it was sold at a loss, then it does not matter. Installment sale is not an issue and no election required

[Armando Beaujolais]

Is this considered installment sale becuase he is receiving money every month. I would rather treat as NON installment sale for Pizza businesses.

You can elect out of the installment method by reporting the entire gain in the year of sale. See TTB page 6-14.

Was the sale reported on Form 8594? See TTB Deluxe Edition page 25-2.

[Unregistered]

You can elect out of the installment method by reporting the entire gain in the year of sale. See TTB page 6-14.

Was the sale reported on Form 8594? See TTB Deluxe Edition page 25-2.

Sale was not reported on 8594. Should I file one any way.

Also, Client completed three SCH "C" last year (H & R block prepared it) under same federal ID. Do I need to do the same or can I file ONE sch C as FED id is same

Thanks

[OldJack]

Sale was not reported on 8594. Should I file one any way.

It is each parties responsibility to file form 8594 with their tax return. Remember also that if property sold on the installment method is depreciable property subject to ordinary income recapture, all depreciation recaptured as ordinary income must be included in income in the year of sale, whether or not an installment payment is received in that year.
TTB 6-13