Sale of a BLOG

[rtsietsema]

Client created her own BLOG several years ago, and has been reporting income and expenses through Schedule C. It has been relatively profitable over the years generating several thousand taxable per year.

When I received her tax info this year, I discover she sold the BLOG in September of 2016 for $2500. There still will be income and expenses for 2016 prior to the sale.

I can't really see that she would have any basis in the sale. All expenses of building, maintaining and operating the BLOG have been taken as expenses and she didn't purchase it from anyone else.

I seeking wisdom from some more experienced preparers on where and how this is reported. All help is greatly appreciated. Thanks.

[Burke]

Sounds like it was all created goodwill. Taxable.

[ttbtaxes]

This is a self-created intangible, under Section 197(d)(1), and will be eligible for capital gain treatment. It has no cost basis.

[Roland Slugg]

I don't believe the sale should be reported on F-4797, Part I, because it was not the sale of a §1231 asset. Report it on F-8949, where it will flow to Schedule D.

If reported on F-4797, the gain would be subject to possible offset by nonrecaptured §1231 losses deducted during the five preceding tax years. Reporting directly on Schedule D (via F-8949) avoids this possibility, albeit a rather remote one.

[ttbtaxes]

Agree. It would only go on a 4797 if it was a purchased intangible rather than a self-created one.