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New political term I just ran across today - Fauxcahontas. I like it.

I have seen several sales of this type go well, and also one which went terrilbly wrong. The one which went wrong was instructive, because the sale was structured to take advantage of potential tax savings while leaving the seller exposed to some unlikely problems. Naturally, the unexpected happened and the seller wound up wishing they had focused on legal protections at the expense of saving a few tax dollars. (I came into the picture after the fact, and had nothing to do with the original arrangement) My advice is to focus on the legal aspects of the sale and be sure your interests are protected there in your initial planning. After that, look to the tax aspects for making adjustments, but be sure you dont sacrifice thousands of dollars of legal protection in order to save a few hundred dollars in taxes (or simply the timing of tax payments). You said in your orignal post that you are planning to meet with profesional advisers - smart move. Find a good lawyer and a qualified tax pro, then listen to their advice. Hopefully you've located people who have experience with this sort of transaction. Their services wont come cheap if they are good, but they will pay for themselves many times over.

IRS Publication 544 speaks to the dispositon of assets. Publicatioin 537 speaks to installment sales. Publication 4681 speaks to canceled debts, foreclosures and repossessions. Publication 4849 speaks to not being able to pay taxes you owe. These are all free at www.irs.gov. If you are a good study, they will help give you some general information. Tax professional will tie the tax implication knot for you, however, he may need to be guided by an attorney based on the facts and circumtances of your situation and other nontax issues. Good luck.

You really need to sit down face-to-face with your tax advisor so you can go back and forth in real time to explore your issues. Some starting questions for you to discuss would include why your partner is willing to accept a stock sale when an asset sale would be more beneficial and less risky (unknown liabilities, etc.) to him, why you're not selling him 1/4 of the stock each year, what are the terms of your non-compete, is your lawyer sitting in on your meetings, will his lawyer and tax advisor join you to work out the sales contract details, what other types of income you (and your spouse, if married) expect and what amounts over the next four years, what you will do if your soon-to-be-ex partner defaults, etc. Your tax advisor's questions will depend on your information to him and cannot be predicted in a vacuum. You can find lots of reading material online and in a good business library to bring you up to speed on the generalities. This is a site where tax professionals discuss tax issues among ourselves. As you said, no one can know everything, so we can get advice from and share with colleagues, especially those that use ATX tax prep software. Your tax preparer may be here. Do you really want him to think that you trust him so little that you had to start with other pros before him!