If you sell your business, there are rules for determining the treatment of gains or losses from various dispositions of property. The sale of a business is not usually a sale of one asset. Instead, all of the assets of the business are sold. Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss.
When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. The sale of capital assets results in capital gain or loss. The sale of inventory results in ordinary income or loss. The gain or loss from the sale of real property or depreciable property can be treated in a variety of ways. More information on the sale of a business can be found in Publication 544, Sales and Other Dispositions of Assets.
Other topics related to selling a business include:
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