New client, has a car lot. I have never done a car lot before and don't recall, if I am remembering correctly, the total financed goes in as income regardless of if he has received the funds or not, as well as the total cost of the vehicle sold as cost of inventory sold. Any interest received from said sale goes on schedule B. So he has to pay tax on money he hasn't received correct?
Is he operating as schedule C?
Business income is business income.
If he is in the business of financing interest would be busines income I think.
I think you are correct with the sale of the vehicle on contract as I believe inventory cannot be sold on installment sale.
Ask yourself what he is in the business of doing and identify his business income.
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