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Hello everyone. I am hoping that I can get a bit of guidance on the partial sale of my business. My name is Curtis and I own a pool service and repair company in California. As my business is a small company, I am looking to package up and sell off a portion of my accounts. I have been operating the business for less than 2 years. I started the business by buying an existing pool route from another person. I originally paid close to $40k for the pool routes. To be clear, I bought just the customers, not the business, from the person. I created my own business when I started. I am a sole proprietor. I have grown the business quite a bit, and I am looking at selling what will ultimately amount to about $35K of my customers. I will still be operating as the same pool service company after the sale. My reasons for doing so are mainly just to generate cash flow, as acquiring new customers has proven to be something I am good at. I would like to know what the tax implications of the sale will be.
1) Is it considered short term capital gains, or something similar, because the accounts I will be selling are less than 2 years old?
2) Will the sale of part of the business accounts be offset by my initial investment in the company, and therefore not subject to tax?
Thank you
1) Is it considered short term capital gains, or something similar, because the accounts I will be selling are less than 2 years old?
2) Will the sale of part of the business accounts be offset by my initial investment in the company, and therefore not subject to tax?
Thank you