Form 5405

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Definition of 'Form 5405'

Form 5405 is an IRS form used to report the sale of a business. The form is used to calculate the gain or loss on the sale and to determine the amount of taxes that are due. The form must be filed by the seller of the business within 30 days of the sale.

The form includes information about the seller, the buyer, the business, and the sale price. The seller must also provide information about any debts or liabilities that were assumed by the buyer.

The gain or loss on the sale is calculated by subtracting the adjusted basis of the business from the sale price. The adjusted basis is the original cost of the business, plus any improvements that have been made, minus any depreciation that has been claimed.

The amount of taxes that are due on the sale depends on the seller's tax bracket. The seller may also be eligible for certain tax breaks, such as the Section 1231 gain or loss rules.

Form 5405 is a complex form, and it is important to complete it correctly. If you have any questions about the form, you should consult with a tax professional.

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