Today TaxMama hears from Tony in Texas, with this tale of woe.
https://www.grapplearts.com/wp-content/languages/new/write-an-analytical-essay.html
“I sold a business and was never paid all of the money that was owed to me. The company closed and went out of business and never paid me. Can I go back to 2006, the year of the sale and recomputed the profit?
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Dear Tony,
I expect we’ll be seeing a lot more of this kind of thing in the next few years.
Work with a tax professional to review the way that sale was reported in 2006. Amending a return to correct the sale of business is tricky stuff.
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If it was reported as an installment sale, you will have to amend both 2006 and 2007.
If you reported all income from the sale at one time in 2006, that will be the only year to amend.
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However, when you sold the company, didn’t you file some sort of security document to make you a secured creditor? Or didn’t you secure the loan against the buyer’s home? You may still have some recourse against the buyer’s assets. If you do, you should try to collect.
If you’re going to try to collect, you can still amend those tax returns now.
https://www.grapplearts.com/wp-content/languages/new/veteran-resume-help.html
When you collect, you can either amend them again or pick up the income all at once in the year you collect it.
For forms:
Use the current Form 1040X
https://www.irs.gov/pub/irs-pdf/f1040x.pdf
Use the 2006 Form 1040 and related Forms and Schedules
https://www.irs.gov/formspubs/article/0,,id=169996,00.html
Use the 2007 Form 1040 and related Forms and Schedules for the second year
https://www.irs.gov/formspubs/article/0,,id=182756,00.html
And remember, you can find answers to all kinds of questions about failed installment sales and other tax issues, free. Where? Where else? At TaxMama.com
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