of this is fine with me but my question has to do with the details of the offer, such as the 'breakdown' of the installments, ie; principal and interest. Should it matter to me (tax wise) how the payments are disclosed? I will be getting the same amount regardless so I am confused as to what difference it makes. I 'assume' my income tax liability will be the same, correct?The interest is all ordinary income and then a portion of each payment is considered "gain"(assuming you have appreciation). Here's an example.I sell a capital asset for $150,000 (with a basis of $30,000) on installment to receive payments yearly. I receive $50,000 on the date of sale and then charge 5% interest/year. I have a gain of $120,000 which is 80% of $150,000. Therefore, 80% of the principle portion of the payment is taxed as gain and 20% is considered return of capital. All of the interest ($5,000 on the first payment) would be ordinary income.You should talk to an accountant, though, as if there is any depreciation recapture it must also be recognized in year 1.aly
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