TN 13 (11-12)
RS 01803.130 Computing Net Earnings from Self-Employment (NESE) for the Year the Business is Sold
When determining NESE after selling a business, include income that comes from selling
inventory or stock in gross receipts. Exclude income received from items that are
not inventory; e.g., fixtures, goodwill, real estate.
When an individual sells his or her business, but retains ownership of accounts receivable:
-
•
Include collections in the year received, if you use the cash basis method of accounting.
-
•
Exclude collections if using the accrual method, since collections is NESE in the
year of the sale.