FTPhil
Level 3

I have 2 clients, a father and son. They own and run a small information business in the father's home. In the end of 2020 the son bought out the father's share of the business. The terms of the sale are as follows; $200,000 sale price 20% flat rate simple interest = $240,000 to be paid over 10 years. There is no "physical property" involved in the sale, the son is still going to use the father's home as the office and all computers etc. where included in the sale agreement. Both have always reported the income on Schedule C.

The question's...

Where does the income get reported on the father's tax return?

Where does the expense get reported on the son's tax return?

What forms need to be filed with the IRS and by whom?

Thanks!

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