Here is my situation. I own a single member LLC that files as a disregarded entity. Under this company, I have created a successful mobile app that makes very good money.Recently, another company offered to buy me out and I agreed and has bought the app and paid a lump sum for it.Since this app was created by me over the last 2 years, I've owned it for over a year.My question is, can I claim the lump sum for selling it to another company as a long term capital gain, and if so, how do I write this up on my taxes?Obviously I'd like to avoid claiming this as ordinary income and pay more than 10% more taxes on it.Any help would be appreciated.
Unfortunately, computer software you write is not a capital asset. So capital gain is out.Even more unfortunately, income from the sale of computer software you write is self-employment income. The right place to report this is on Schedule C. Hopefully, the figure is large enough that you max out the SE tax and limit that bite.--Peter
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