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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11188
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I sold a business with an installment note owing. The buyer

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I sold a business with an installment note owing. The buyer failed to pay the installments after the first 14 months. A resolution was reached and a payoff number decided. He has paid the note in full now. I would like to know what percentage to set aside for taxes.

Lane :

HI,

Lane :

Just as when you were in note repayment... you were recognizing an proportionate portion of the gain ... what you'd do (for WHATEVER transpired during the tax year) is recognize whatever gain has not been recognized (over and above your basis, of course) and this will be at capital gains rates, which are based'on your ordinary income tax rate:

Lane : <table border="0">


ordinary tax rates
0%, 15%, or 20%
3.8%


10%
0%


15%
0%


25%
15%


28%
15%


33%
15%
3.8%


35%
15%
3.8%


39.6%
20%
3.8%


Lane :

Questions?

Customer:

As I understand it then if my tax rate is 28% the amount paid would be taxed 15%

Lane :

That's right

Lane and 2 other Tax Specialists are ready to help you

Thanks Joe.

Let me know if I can help again.

Lane

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