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April 18, 2020
Question

Sole proprieter Investment Advisor. sold my book af clients for $494,000 to be paid by the buyer over 5 years. Received $22,912 in 2019. .What do I report for 2019

  • April 18, 2020
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    1 reply

    LudwigVan_fan
    Employee
    April 18, 2020

    Here is a link to Publication 537, Installment Sales.  It discusses how, what property is eligible, where/how to report.

    https://www.irs.gov/pub/irs-pdf/p537.pdf

     

     

    Your question is very brief, I'm assuming you sold a business.  If so, you have to allocate the sales price amongst the various assets sold and follow the rules for each type of asset.

     

    Also, you don't mention if there is stated interest or not.  If there is no stated interest, or the interest is less than FMV, you have to consider imputed interest as well.  That is discussed in Pub 537 also.

     

    The general rule for installment sales is sales price, less basis=gain or loss.  If loss, than no installment sale for tax purposes.  If there is a gain, you report the portion of sales proceeds received, less the pro rata share of basis=pro rata share of gain to be reported in the year.  Over the course of the installment sale, the portion of basis and gain is reported based upon the ration of the sales proceeds received.  This is for qualifying property.

    **Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**