Question
Sale of Scorp assets with a loss
I have a client who sold his Scorp assets for $800,000. The sales agreement indicates that $191,000 was allocated to FF&E and $5,000 to inventory. The remainder was not specified but I would allocate it between goodwill and covenant not to compete. How would this be reported if the client has stock basis of $1,500,000? I think it should be a loss, but can it be treated as an ordinary loss? If so, how does that look on the return?
