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Hi, my name is Mark. I will be happy to help you with your questions.
Based on your post, it sounds like you are doing an installment agreement.
What was your basis in the property that you sold? What was the selling price?
You would allocate a portion of the down payment to gain, and a portion to basis.
Let's assume that you bought a piece of land for $100,000 and sold it several years later for $300,000 in an installment agreement. The buyer makes a down payment of $30,000. So have a gain on the sale of the property of $200,000. The gain would be recognized over time as the principal is paid down on the note. So here is how the down payment would be treated.
($30,000/$300,000) or 10% x $200,000 = $20,000 of gain would be realized. The remaining $180,000 of gain is deferred until the buyer pays down the principal.
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