ahearn

I have a financial planning client who has a ranch operated as a Sub S corporation. The S corp is on a cash basis and so is my client. This year the entire herd was sold for around $350,000 on an installment basis. The client is receiving 20% of the sale amount for the next five years and 7% per year as interest on the unpaid balance. When the cows were sold my client's CPA told them that the entire sale would be subject to tax, even though they are only receiving 20% of the sale. This does not make any sense to me since they are cash-basis taxpayers. Anybody have any ideas why tax should be paid on the entire sale amount?

Have a client that has an LLC with one rental property. They are considering buying another house and want to sell their current house, which is their principal residence, to the LLC. I'm not sure if the sale to the LLC, which only consists of the husband and wife, would qualify for the home-sale exclusion. Does anyone have any thoughts on this matter?