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The sale of accounts receivable by a cash basis taxpayer is fully taxable in the year of the sale.
Unfortunately, there is no way to avoid the ordinary income on the receipt of that cash.
The purchasing company will then have basis equal to the full value of the receivables, and will not recognize income unless they receive more than the value of the receivables.
Does this mean the seller who receives the income from cash flow to pay off business for the Buyer/
I'm not sure I understand your follow up question
Does this mean the seller pays taxes on cash received from the buyer who is paying for the business?
That is correct, if they are a cash basis taxpayer
If they are an accrual basis taxpayer then there is no income because the revenue has already been taxed
the buyer agrees to pay for business consisting of accounts receivable and is paying the seller from cash flow who pays the tax/ the seller?
yes, the seller pays tax
the buyer has no tax on the transaction
they are a cash basis buyer. I want to make sure the cash flow is taxed and not the purchase price
For a cash basis taxpayer, the cash received is taxed. So, if there are other installments the income would be recognized when the cash is actually received
so the seller is taxed on cash received for the business and not the entire purchase price before it is received?
any way to print this?
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The cash basis taxpayer is taxed on income actually received, yes