What type of taxes do you have to pay after selling a small business (partnership)?

Question

What type of taxes do you have to pay after selling a small business (partnership)?

Answer 1

The sale of the business will be treated as a long term capital gain.  The gain will be the diference between your adjusted basis in the business, and the sale price.

For cash basis accounting, you report this gain in a single year, if all the proceeds are paid in a single year. If proceeds are received in more than one tax year, the capital gains would be spread out over the tax years piorceeds are recieved.  This would be an "installment sale."

If you use accrual basis accounting, then you report it all in the year of the sale.