How to handle taxes after selling all my Schedule C business equipment for $250k?

What about QBI deduction? Would that help in this situation at all? And how much should they set aside for taxes - like ballpark percentage?

The QBI deduction (Section 199A) generally applies to ordinary business income, not to gains from selling business assets. Since this is a one-time sale of depreciable business property, it wouldn't qualify for the QBI deduction. As for how much to set aside, it depends on your tax bracket, but I'd recommend setting aside around 30-35% of the gain. Your gain is approximately $245k ($325k sale price minus $80k remaining basis after depreciation). Some of that will be taxed as ordinary income (the depreciation recapture portion) and some might qualify for lower capital gains rates. Better to have too much set aside than too little.

Does it actually work with complicated stuff like this? I've used TurboTax forever but I'm selling my rental property this year and getting worried about all the depreciation recapture stuff.

How much does it cost? I'm always suspicious of these tax services that don't list their prices upfront.

It absolutely handles complicated depreciation situations. The service was built specifically for business owners with complex tax situations. I had tried using TurboTax first, but it wasn't clear how to handle some of my specialized equipment that had different depreciation schedules. The taxr.ai system correctly identified which assets qualified for Section 1245 vs Section 1250 treatment. They have different options depending on your needs. I found it very reasonable considering the amount of tax it saved me and the confidence of knowing it was done right. They have a review option where they analyze your existing documents and point out issues, or more comprehensive options where they guide you through the whole filing process.

Wait, how does this actually work? The IRS phone system is a nightmare but I don't understand how some service can magically get you through faster than everyone else.

This sounds like BS honestly. If it was that easy to get through to the IRS everyone would use it. I'm pretty sure they just keep you on hold the same as if you called yourself.

It works because they use an automated system that continually calls the IRS and navigates through all the phone prompts until they get a human on the line. Once they have an agent, they call you and connect you directly. It's basically doing what you'd do manually, but their system handles all the waiting and frustrating menu options. The IRS phone systems are designed to handle their call volume by using complex phone trees and long wait times. Claimyr's system just handles that painful part for you. It's not cutting the line - you're still waiting your turn, but their system is doing the waiting instead of you sitting with a phone to your ear for hours.

Thanks for the suggestion, but unfortunately I already received the full payment. They wired the entire amount directly to my business account. If I had known about installment sales beforehand I definitely would have structured the deal differently. Any other ideas for reducing the tax hit when you've already got the money?

Since you've already received the full payment, the installment method isn't an option anymore. At this point, your best strategies would be to look for offsetting losses or deductions. Consider maximizing retirement contributions if you haven't already. If you have any investments currently at a loss, you might consider selling them to offset some of the gain. You could also potentially make substantial charitable donations if that aligns with your goals. Just be aware that there are limitations on how much you can deduct in a single year based on your AGI.

Section 179 property works differently. When you sell it, you'll have to recapture the entire amount you expensed if selling for more than the basis. It's all treated as ordinary income, not capital gains. Basically, the IRS wants back all the tax benefit you got from immediately expensing it.

Good point! I paid a business broker about $15k to help find a buyer and handle the paperwork. I'm guessing I can deduct that from the sale price before calculating my gain?

Yes, that $15k commission to the business broker absolutely reduces your gain! You'd subtract it from the $325k sale price before calculating your gain. So instead of a $245k gain, you're looking at a $230k gain. That should save you several thousand in taxes. Also track any other expenses directly related to the sale - legal fees, appraisal costs, even travel if you had to meet with potential buyers. Every dollar in selling expenses is a dollar less in taxable gain.

Great question about timing! From what I've learned lurking here, the timing can definitely matter for tax planning. If you complete the sale early in the tax year, you have more time to implement offsetting strategies like maximizing retirement contributions, harvesting investment losses, or making charitable donations before December 31st. However, you also want to consider your overall income for the year. If you're having a particularly high-income year already, it might make sense to push the sale to the following year if possible. As for tax professionals, given the complexity of depreciation recapture and the significant dollar amounts involved, I'd definitely recommend getting professional help. The cost of a good tax advisor will likely be a tiny fraction of what you could save (or lose) by getting the calculations wrong. Equipment sales involve some really specific rules that general tax software might not handle perfectly.