Have a Tax Question? Ask a Tax Expert
Hi and welcome to Just Answer!You are correct - that is a sale of the intangible asset - and the gain is treated as a capital gain - not subject of self-employment taxes.However - because that is self-created asset - the gain is not eligible for long term capital gain treatment - but will be taxed as a regular income.
An installment sale is a sale of property where at least one payment is to be received after the tax year in which the sale occurs. You are required to report gain on an installment sale under the installment method unless you “elect out” on or before the due date for filing your tax return (including extensions) for the year of the sale. You may “elect out” by reporting all the gain as income in the year of the sale.