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Author: TommQ Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121351  
Subject: Sale of an asset - business tax question (LLC) Date: 2/6/2012 3:42 PM
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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.
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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 114987 of 121351
Subject: Re: Sale of an asset - business tax question (LL Date: 2/6/2012 7:35 PM
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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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