Discussion:Installment sale expenses
From TaxAlmanac
Revision as of 12:26, 26 September 2006
Discussion Forum Index --> Tax Questions --> Installment sale expenses
| 26 September 2006 | |
| Assume the following facts, which are simplified:
1) Taxpayer (single) sells home in 2005 for $1,000,000 2) Adjusted basis of $300,000 3) Assume no closing costs, except for a $200,000 holdback for septic repairs. 4) The repairs aren't made until 2006, and $75,000 of the holdback is disbursed for this. The remaining $125,000 is released to taxpayer. I want to treat the cash ultimately received from the escrow as an installment payment made in 2006 to get some of the gain into that year. But do I have to say $200,000 was received in year 2 on a $1 million contract price, and then deduct the $75,000 against gain recognized in year 2? Or can I say $125,000 is installment cash received in year 2, and keep the $75,000 selling expense in year 1. I'm starting to think the first option is the right way to do it, since the actual expense wasn't known and wasn't paid until 2006. | |
