Capital Gain calculation for funds held in escrow

[oldzort]

Inherited property sold after 7 years for 230,000, appraised value at time of inheritance plus allowed expenses 148,000, capital gains of 82,000--no problem yet.

However 25,000 of the 230,000 will be withheld until such time as certain contract stipulations are met but not more than 3 years

Do I pay CG on the 82,000 and file an amended return if the full 25000 is never realized....or

Do I account for this holdback now, reducing CG to 57,000 and pay CG on that amount when it is received.

[DavidD66]

You would report the sales proceeds as $205,000 resulting in a gain of $57,000.  When, and if you receive the remaining $25,000 you would report that as an gain in the year it is received.