When pymts are supposed to include interest

[schirallicpa]

In the real world men make agreements to pay in round dollars.  So - on a 2 million dollar sale of assets, my client is receiving 48000 per year for 4 years, and then will receive the remaining 1808000.  The seller and buyer are both reducing the debt by the 48000.  

Then the IRS says - no - that includes some amount of interest.

So - I feel like I need to reduce the principle being applied to the 6252 and report some interest.  But is that common?   

I inherited this one, and the previous preparer did not recognize any interest.   I'm in the woulda, shoulda, coulda mode.

[Lee B]

Under imputed interest rules, the $ 2 Million would be the combined  total of principle and interest payments for the contract

using the AFR at the time the contract was initiated.

[schirallicpa]

I'm thankful for this forum.  Sometimes you just need to talk things out.  My dogs aren't very good at tax stuff.  Although they do like to take the paper roll  hanging to the floor from the calulator.

[mcb39]

On 3/30/2024 at 3:39 PM, schirallicpa said:

I'm thankful for this forum.  Sometimes you just need to talk things out.  My dogs aren't very good at tax stuff.  Although they do like to take the paper roll  hanging to the floor from the calulator.

So true.  I doubt that I could function without at least one visit here per day.  So much knowledge here and people to help each other see the trees for the forest.  Grateful and Happy Easter to all of us who are working today and those of us who aren't.