the easiest way to report the non-compete component of the sale is as follows
say the noncompete was $60K and everything else was $180K. thus the total proceeds will be $240K (exclusive of interest). the non-compete is 25% of the total so for each payment you get 25% would go towards the non-comete and 75% would be reported on the 6252. the non-compete portion is reported on line 10 of form 4797 - no basis.
note that the tax laws require there to be interest paid on the deferred payments. if none is specified or inadequate it must be imputed which makes part of the payments and total interest
The interest rate for an installment sale depends on various factors such as the type of sale, the parties involved, and the terms of the contract. In general, an installment sale contract provides for adequate stated interest if the stated interes...1. The test rate of interest is determined by the IRS and is updated periodically 1.
If you are looking for more information on installment sales, you may find the following resources helpful:
- IRS Publication 537: This publication provides detailed information on installment sales, including the rules for determining the interest rate.
