Carl
Level 15

Investors & landlords

Now that the property has been sold, am I allowed to deduct the cash payment on my federal and state tax returns as an expense relating to the sale of business property?

Yes, provided it's cash that you reported as income (in any tax year) and paid taxes on already.

In other words, you would "not" reduce your rents received for the year, by the amount of cash you paid the tenant to move out.