USA Capital loss sale of business that is sole proprietor


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I just was given the task of doing a 2016 tax return that the owner sold a restaurant in 2016 that was bought in 2012. They paid 260k in 2012 got 195k I. 2016. I don't have any sale agreement
I have a number of questions on this
Do you have to breakdown asset type
They didnt own building not sure what asset included in sale
What about price given based on 2.5 yearly sales
Can only 3k of loss be taken against ordinary income?
Is there a way to take all loss in 2016?
They are meeting with IRS on Wednesday
They never filed and irs sent notice to them based on credit card receipts
Any help or thoughts on this welcome
This is sole proprietor , and there is not a balance sheet just a notebook p&l that the owner drew up from going though his bank statement
 
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IRS considers each asset sale a transaction. The tax treatment for each asset is different. Inventory is different from equipment or property.
Get a copy of the sale agreement first before you do anything. You will also need to figure out how much was good will.

See form 8594

 

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