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.