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Subject Author Date
Tax treatment of money not received.... Taxlover 12-16-2007
Posted by Taxlover on December 16, 2007, 9:26 pm
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 I sold my company in 2007. My basis was small.
They paid me 50% in cash and put 50% into an escrow account to be used for
environmental remediation. I might not get any of that if the remediation
goes bad, or I might get it all back plus appreciation in 10 years if all
goes well.
I have to pay income on income the account makes.
I have no control over it, except to go to arbitration if the buyers misuse
it. (I had to threaten to do that repeatedly the first few months, but they
seem to have calmed down now.)

At the time my accountant said I would pay capital gains on the 50% I got
this year, and the rest when I got it.
How does the basis work into this? Do I use half the basis for each, or all
the basis for the first 50% and zero basis for the remainder.
In March I will find out my accountants opinion, but I am curious now.
There were some major tax events; I am thinking about getting TaxCut now and
seeing how things will work out. Obviously they will be issuing updates,
but will it be reasonable correct now?


Posted by Bob Sandler on December 16, 2007, 11:49 pm
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>I am thinking about getting TaxCut now and
>seeing how things will work out. Obviously they will be
>issuing updates, but will it be reasonable correct now?

Yes, except for any last-minute changes that Congress might
make. Those could be significant, especially if you are
subject to AMT.

Bob Sandler


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