I sold via installment payments my business as a Sole proprietor, financial services, planning etc. How are payments taxed?

It depends on exactly what you sold.  If there is an amount for goodwill, equipment, etc the payments must be applied exactly the same by the seller and the buyer.  A form that should be completed and filed with both returns is Form 8594.

Form 8594- Must be completed and filed by both buyer and seller :

This form is not supported in TurboTax Online or TurboTax Desktop.  This form should be completed and filed with your tax return, and an exact duplicate filed with your buyers tax return. This means you should mail your return.

Most importantly is that both the buyer and seller must have the exact same information on Form 8594.  Use the link to print the form and complete it.  A second option would be e-file your tax return and then file an amended return attaching only that form.

Who must file Form 8594?

Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale if:

• goodwill or going concern value attaches, or could attach, to such assets and
• the purchaser's basis in the assets is determined only by the amount paid for the assets.

When To File

Generally, attach Form 8594 to your income tax return for the year in which the sale date occurred.

If the amount allocated to any asset is increased or decreased after the year in which the sale occurs, the seller and/or purchaser (whoever is affected) must complete Parts I and III of Form 8594 and attach the form to the income tax return for the year in which the increase or decrease is taken into account.

Once you have a sales price for each business asset (includes goodwill) you will report the sale on installment if  you choose.

 You can prepare the installment sale  in TurboTax (Form 6252).  

To record an Installment sale in TurboTax Online/Mobile or TurboTax Desktop:

1. Click on Search (upper right) and type Installment Sales > Press enter > Click on "Jump to Installment Sales"
2. On the page "Any Other Property Sales" check the box for: "Sales of real estate, cars, or anything else for which you receive payments over two or more tax years (installment sales)" and click Continue
3. On the Installment Sales page answer yes to "Do you want to report an installment sale?"
4. Continue through the interview and record the details of your Installment Sale

Keep in mind that all depreciation recapture must occur in the year of the sale and cannot use the installment sale for this part of the sale, if applicable.