Engineering Firm stock sales

Forum|Forum|6 years ago
February 18, 2020
1 reply
0 views

I was a partner at an engineering firm and decided to leave that company. When I left I sold all of my shares back to the company. We created a Buy/Sell agreement where they agreed to purchase my shares for the set year value and pay off any outstanding debt I had on shares. So they payments was the value of the shares minus the debt. The money is being given to me over 4 years with the first payment happening in 2019 when I left. How do I report this since it was capital gains? Do I report as a stock sale as if the full payment happened or do I report it as installment payments?

LudwigVan_fan

Employee

Here is a link to rules for installment sales. Note that under stock or securities that they don't qualify IF sold on an established securities market. It doesn't appear your sale is on an established market.

https://www.irs.gov/publications/p537#en_US_2018_publink1000221595

From the brief reading of your question, it would appear that when you sold the stock (2019??) relief of debt would be considered a payment. If the year of sale is 2019, then payments would include relief of debt plus any cash payments received.

**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**