|
Posted by Stuart A. Bronstein on April 13, 2007, 11:48 pm
Please log in for more thread options
> An internet business is for sale. It has a zero cost basis.
> Although the asking price does not seem unreasonable, IMRHO
> I can see someone paying cash up front for it since the owner
> is going to Canada for 2-3 years.
>
> He asked me if instead of selling the business what would be
> the tax consequences of leasing it with an option to buy in
> 2-3 years. My reaction was that would ne converting capital
> gains into ordinary income! I suggested he sell the URL and
> the software on a contract basis. He was afraid the IRS
> would treat it as though he sold it and had to capture the
> income in the year of sale.
The last time I checked, installment sales for cash-basis
taxpayers had receipts from sales taxed in the year
received. He could have them pay over three years and have
his capital gain (plus a bit of interest) stretched over
that time.
If he does that make sure the sale contract includes a
security interest in everything sold - sort of like a
mortgage. He then files a form generally called a UCC-1
with the secretary of state, to perfect the security
interest. If the buyer for some reason doesn't pay, he can
take the business (or what's left of it) back.
Stu
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap