Articles

• Installment Sale: How IRC Section 453 Works (Plain-English Guide)

  How an installment sale is taxed under IRC Section 453: gross profit percentage, a 10-year worked example with tax by year, what qualifies, and the traps.

• Seller Financing Taxes: How an Owner-Financed Sale Is Taxed

  How seller financing is taxed: gain as principal arrives, interest as ordinary income, what is not deferred, the AFR floor, and a 10-year tax-by-year example.

• Structured Installment Sale: How It Works, Costs and Risks

  How a structured installment sale works under Section 453: who pays you, what it costs, the open legal question and what you give up, with worked examples.

• Partial 1031 Exchange Boot: How to Calculate the Taxable Part

  In a partial 1031 exchange, boot is the taxable part. Figure cash and mortgage boot, apply the netting rules, see how it is taxed by layer. Worked example.

• Installment Sale of Real Estate: Rentals, Land and Your Home

  How an installment sale of real estate is taxed: rentals, commercial property, land and your home, with the $250k/$500k exclusion, recapture and debt rules.

• Installment Sale of S Corp Stock, LLC and Partnership Interests

  Can you sell private stock or an LLC interest on installments? Yes, with limits: public stock never qualifies and a partnership's hot assets are taxed up front.

• Seller Financing for Land: How Owner-Financed Land Is Taxed

  How seller financing land or farmland is taxed: gain spread with the note, no recapture on raw land, the new section 1062 farmland election, and a $2M example.

• Selling a Business: Tax Implications and Capital Gains Explained

  Selling a business is taxed asset by asset: goodwill as capital gain, equipment and inventory as ordinary income. Asset vs stock sale and a $5M example.

• Form 6252 Instructions: How to Report an Installment Sale

  Form 6252 line by line, with a filled-in rental example for year one and year two, where each number flows, how recapture works and how to elect out.

• Gross Profit Percentage on an Installment Sale (Worked Examples)

  How to calculate the gross profit percentage on an installment sale: selling price vs contract price, assumed mortgages, recapture and later price cuts.

• Installment Sale vs Lump Sum: Which Leaves You More After Tax?

  Installment sale vs lump sum: when spreading the gain lowers your tax, when taking cash wins, and how to elect out of the installment method.

• Installment Sale California Rules: FTB, Withholding, Moving Away

  How California taxes an installment sale: all gain as ordinary income, Form 593 withholding on each payment, and why moving out of state does not end the tax.

• Installment Sale Depreciation Recapture: Why Year One Gets Taxed

  Section 1245 recapture is taxed in the year of sale even on an installment note; unrecaptured 1250 gain is spread. Rules, rates and a worked example.

• Installment Sale to a Related Party: The Two-Year Rule Explained

  Selling to your kids or your own LLC on a note? How the two-year resale rule, §453(g), ordinary income and interest rules apply, with a worked example.

• Section 1245 Recapture: Equipment, Section 179 and Business Sales

  Section 1245 recapture taxes equipment gain up to the depreciation you took as ordinary income, in the year of sale, even on a note. Rules, rates, examples.

• Section 453A: Interest Charge and Pledge Rule on Large Notes

  Section 453A charges interest on deferred tax when installment notes top $5 million and treats borrowing against a note as payment. How it works, with examples.

• Seller Financing With an Existing Mortgage: Payoff, Assume, Wrap

  Can you seller-finance with a mortgage still on the property? How a payoff at closing, an assumed loan and a wraparound note change year-one tax, with examples.

• What Happens to an Installment Note When the Seller Dies

  When a seller dies mid-note, heirs get the payments and the tax. How IRD, the missing step-up, §691(c) and self-canceling notes work, with an example.

• Buyer Defaulted or Paid Early? Your Installment Sale Tax

  What happens to your installment sale tax if the buyer defaults, you repossess under Section 1038, the buyer pays off early, or you sell or pledge the note.

• Is Seller Financing a Good Idea? Pros, Cons and Risks for Sellers

  When seller financing is a good idea for a seller and when it is not: pros, cons, default risk, the tax effect, a cash vs note example and a decision checklist.

• Land Contract vs Seller Financing: Title, Default and Taxes

  A seller financing land contract keeps title with the seller until paid; a note and deed of trust transfers it now. Compare title, default rules and taxes.

• Seller Carry Back: How It Works, the Risks, and the Taxes

  A seller carry back is a note you take for part of the price, usually behind a bank loan. How it works, why it is risky, how to protect it, and how it is taxed.

• Seller Financing Addendum: What It Covers and What to Add

  What a seller financing addendum covers, the Texas TREC form, California disclosures, federal lending rules, and the terms and tax items sellers should raise.

• Seller Financing Balloon Payment: How It Works and How It's Taxed

  How a seller financing balloon payment works, the balance due at 3, 5, 7 and 10 years, how the balloon is taxed, and balloon vs fully amortizing.

• Seller Financing Commercial Real Estate: Terms, Taxes and Risks

  How seller financing commercial real estate works: common structures, note terms, how the gain is taxed year by year, and a worked $3 million building example.

• Seller Financing Contract Terms: What to Put in the Note

  The documents and terms in a seller financing contract, from down payment and rate to balloon and due-on-sale, and how each term changes the seller's tax.

• Seller Financing Example: Payments, Interest and the Seller's Tax

  Figure a seller-financed payment, the balloon, interest income and the tax on your gain each year. Worked example, formulas and the traps sellers miss.

• Seller Financing Interest Rate: AFR Minimum and Imputed Interest

  The minimum interest rate on a seller-financed note is the applicable federal rate. What happens if you charge less, which AFR applies, and a worked example.

• Seller Financing a Business Sale: Taxes, Allocation and the Note

  How seller financing a business is taxed: which assets can use the installment method, why the price allocation decides it, and a worked $3M example.

• Seller Financing a Home: Selling Your House With Owner Financing

  How seller financing a home works for the seller: the note and deed of trust, lending rules, the home sale exclusion, interest reporting and a worked example.

• Deferred Sales Trust vs Installment Sale: What Is Different

  A deferred sales trust is an installment sale to a trust that resells and invests. How it compares with seller financing and structured sales, and tax risks.

• Monetized Installment Sale: How It Works, Why the IRS Objects

  A monetized installment sale pairs a note with a loan of most of the price. Why the IRS proposed listing it, the risks, how it differs from a structured sale.

• Seller Financing vs Structured Sale vs Cash: Side by Side

  Seller financing, a structured installment sale and a cash sale compared: who owes you, security, rate, cost, credit risk and tax timing, with a worked example.

Educational only, not tax, legal or investment advice. Examples are illustrative. Have your CPA or tax attorney review your facts before you act. Hans Goldstein is a licensed insurance agent (CA Insurance License #4273294) and is not a CPA or attorney. He is paid a commission only if a structured installment sale is funded; seller financing pays him nothing. Disclosures.