SELLING. 0 / C (OWNER FINANCE) W / INT GRADE RANGE. TAXES ARE DUE NOW, OR THE PAYMENT OF TAXES?

If an existent (10 years) is sold, (place / Rental (no buildings) samples, the personal organization to help the poor as well as displays.) All the seller privately financed as well as upheld by the promissory note with interest, taxes Will skill by the sale? Or the (monthly) income is taxed as earnings? How does it work? PS: There was an S Corporation, I would break, as the detriment since of injuries (not related) collision was.

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sumbumblebee May 19, 2010 at 2:11 am

It sounds like you’ve got an installment sale on your hands. Here:
http://www.irs.gov/taxtopics/tc705.html

You don’t have to pay tax on the lump sum, but on the payments via the installment method.

Good luck! :0)

CountryMama May 19, 2010 at 3:07 am

You incur the tax liability as you receive payments on the installment. You’ll split the payment into two components – interest on the loan, and principal. The principal will be partial return of capital, and partial capital gain, while the interest is interest income.

I highly recommend you use a CPA to prorate your gain across the payments received, and to file at least your first return. From there, it should be pretty straightforward, unless the buyer defaults on a payment.

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