When is a sale completed?

[Catherine]

Client sold all shares in a small business stock in Dec 2015.  Was paid the total agreed-upon price in December and cashed the check.  Delays in paperwork (new principal too busy to deal with the lawyers, from what I am told) leaves the stock certificate still in her possession.  Is this a completed sale, since there is no more money to change hands?  Or do I now have an installment sale with no second year (2016) of money changing hands?

[Roberts]

I think there are multiple definitions but I'd say for ownership change - the sale is completed when the primary paperwork agreement is completed and money is transferred.

Conditions in the sale which may need to be met don't really delay a change of ownership.

In a stock sale, ownership has changed hands either on the day of the trade or at least when the money changes hands. When you later determine there is a stop on the stock certificate - doesn't mean you now still own it. You just haven't completed all the conditions of the sale.

[jklcpa]

I think you have a completed sale in 2015. The only things missing are formality of transferring the stock certificates and signatures on the documents that should read effective this date _________in 2015.  It seems to me that all of the main elements of a completed contract are here: offer, acceptance, consideration, intent, certainty, and capacity.

You can't have an installment sale because that requires payments in more than one tax year, and you have a payment only in 2015.

[jklcpa]

Adding to my post above, we aren't lawyers. Your client should call her attorney to determine the status of the transaction.

[JohnH]

A good friend who spent his banking career in commercial lending always says "You haven't sold anything until all the checks have cleared the bank". 

But he is speaking from the practical side rather than from the legal side. And he really has some interesting stories to tell  .