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covenant not to compete

jlew1229
Level 3

Can a covenant not to compete be part of the installment sale, or does all the gain need to be recognized in the year of the sale?  

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Accepted Solutions
sjrcpa
Level 15

Yes and no. It's ordinary income. Taxable each year as paid.

The more I know, the more I don't know.

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4 Comments 4
sjrcpa
Level 15

Yes and no. It's ordinary income. Taxable each year as paid.

The more I know, the more I don't know.
jlew1229
Level 3

Thank you !!  

George4Tacks
Level 15

You may also need to file Form 8594. 


Answers are easy. Questions are hard!
sjrcpa
Level 15

You're welcome

The more I know, the more I don't know.