Sales & Purcahse of Scorp in the same year

[TAX]

Client, Scorp, Purchased motel with land & building in Jan 06.
He does not have allocations of amount as to Bldg, Land, equip, goodwill etc.

Because of family situation he is selling the same on 11/20/2006. Again, he needs to allocate between land, bldg, equip, goodwill etc.

(1) Does it matter how he allocates?

(2) He may not get depreciation when purchase and sale occurs in the same year. So it may not matter. Does it sound right?

Any other tips for handling this purchase and sale in the same year?

[sea-tax]

Client, Scorp, Purchased motel with land & building in Jan 06.
He does not have allocations of amount as to Bldg, Land, equip, goodwill etc.

Because of family situation he is selling the same on 11/20/2006. Again, he needs to allocate between land, bldg, equip, goodwill etc.

(1) Does it matter how he allocates?

(2) He may not get depreciation when purchase and sale occurs in the same year. So it may not matter. Does it sound right?

Any other tips for handling this purchase and sale in the same year?

There are 7 different ways to sunday to allocate a purchase and sale. All of which carry some validity. I personally woud tell the client to allocate the best he can with the info available. If he has property tax records and personal property tax records that would be a good place to start. If your state has use tax he may want to be carefull as to how much he allocated to equipment.

I think the main idea is to keep the figures reasonable . Good luck

[veritas]

Client, Scorp, Purchased motel with land & building in Jan 06.
He does not have allocations of amount as to Bldg, Land, equip, goodwill etc.

Because of family situation he is selling the same on 11/20/2006. Again, he needs to allocate between land, bldg, equip, goodwill etc.

(1) Does it matter how he allocates?

(2) He may not get depreciation when purchase and sale occurs in the same year. So it may not matter. Does it sound right?

Any other tips for handling this purchase and sale in the same year?

He will get depreciation on the building. If their is goodwill there will be amortization. No depreciation for personal property. And I agree with Sea-tax allocate from property tax statements.

[Uncle Sam]

Purchase & Sale of S Corp-Same Year

It's not clear from the post - exactly what's being sold.
Is it the capital stock of the S Corp, or individual assets?
If the Stock is being sold, the breakdown of purchase price doesn't really matter.
However, if individual assets are being sold, and the corporation is still going to exist, then it does matter.
First off-when the client acquired the corporation, were bulk sales reported to the state tax department? Normally tangible personal property transferred would require payment of sales tax, so at least you have basis information for that. Land and building, as the prior poster stated, require FMV estimates from the local government recording office.
Land and building are supposed to reported separately on Form 4797-Land on front, building on back (with depreciation calculations-even with -0- deprec).
When assets are transferred, Form 8594 is supposed to be completed where both the buyer and seller report the breakdown of the assets being transferred, with names and ID numbers of both parties and filed with their respective tax returns for that year.

[sea-tax]

It's not clear from the post - exactly what's being sold.
Is it the capital stock of the S Corp, or individual assets?
If the Stock is being sold, the breakdown of purchase price doesn't really matter.
However, if individual assets are being sold, and the corporation is still going to exist, then it does matter.
First off-when the client acquired the corporation, were bulk sales reported to the state tax department? Normally tangible personal property transferred would require payment of sales tax, so at least you have basis information for that. Land and building, as the prior poster stated, require FMV estimates from the local government recording office.
Land and building are supposed to reported separately on Form 4797-Land on front, building on back (with depreciation calculations-even with -0- deprec).
When assets are transferred, Form 8594 is supposed to be completed where both the buyer and seller report the breakdown of the assets being transferred, with names and ID numbers of both parties and filed with their respective tax returns for that year.

Uncle Sam good points . To original poster you get what you put in -so you may need to clarrify your question. As for form 8594 good idea unfortunately I for one see this filled out by other prepares like never. I do it but most I think don't. I have never seen the IRS go after it though.