I am a 1/3 partner in a S corp. We started it 15 years ago with the objective to rent equipment. We each put in $13,000 to buy the equipment. It has only made either very small gains or losses over the years (+/- $200). The partners have drifted apart and we decided to sell the equipment. So late last year one of the partners sold off the equipment.
I received a K-1 showing a line 9 Net section 1231 gain of $22,000. The proceeds from the sale are sitting in a money market account.
What are the tax implications? It would seem the $22,000 gets reported on schedule D and will be income to me for 2007. Next the corporation will be dissolved. How will that be reflected this year?