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Sole proprietor sold 50% of business and is now a partnership.
Total value of sole proprietorship $600,000.00
Sold 50% to buyer for $295,000.00
Received $15,000.00 down, leaving a balance of $280,000.00
In the purchase agreement it states the following:
The sale shall be treated as an installment sale, including 3 separate payments.
First payment of $93,333.33 due December 31, 2020.
Second payment of $93,333.33 due December 31, 2021.
Third payment of $93,333.34 due December 31, 2022.
The sole proprietor is personally financing each installment with a promissory note with interest of 6.25% per annum, computed quarterly for a term of 15 years.
The sole proprietor doesn’t want to spread the gain over 15 years and wants to do it in 3 years. Can the sole proprietor spread over 3 years even though he is financing the payments? He knows he will include interest over the 15 years for each promissory note.
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