Client agreed to sell land to someone in 2023. Land sale did not occur due to approvals from the twp. Buyer pays cleint $20000 in 2023 to keep the agreement open/in tact. The $20000 is non-refundable and will reduce the purchase price of the land in 2024 when/if it settles. Does the tapayer report the $20000 as income in 2023? and if so, how? as capital gain? ordinary income? instlallment sale? The land has been owned by the client for 20+ years, farmland.
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