How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Mark Taylor Your Own Question
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 967
Experience:  Certified Public Accountant
93680669
Type Your Tax Question Here...
Mark Taylor is online now
A new question is answered every 9 seconds

What is the ghest percentage that I can receive as a down

Customer Question

What is the highest percentage that I can receive as a down payment on sale of long term assets to enable me to defer the unpaid portion until collected ?
Submitted: 4 months ago.
Category: Tax
Expert:  Mark Taylor replied 4 months ago.

Hi, my name is Mark. I will be happy to help you with your questions.

Expert:  Mark Taylor replied 4 months ago.

Based on your post, it sounds like you are doing an installment agreement.

Customer: replied 4 months ago.
Expert:  Mark Taylor replied 4 months ago.

What was your basis in the property that you sold? What was the selling price?

Expert:  Mark Taylor replied 4 months ago.

You would allocate a portion of the down payment to gain, and a portion to basis.

Expert:  Mark Taylor replied 4 months ago.

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.

Expert:  Mark Taylor replied 4 months ago.

($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.

Expert:  Mark Taylor replied 4 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

Expert:  Mark Taylor replied 4 months ago.

Please let me know if you have any other questions or need clarification. I am happy to help.