general_ya
New member
Hi,
I started a computer repair business with a 17,500 interest-free loan from friends in 2007. The structure is a self-proprietorship LLC (California) and the computer business as a DBA. I sold my DBA (retaining the LLC) this year (assets of $5000, rest as goodwill) and seller financed a portion of it as such:
40% down-payment
60% in notes with interest paid full in 5 years.
As for accounting taxes for the current year:
1) Can I treat the sale as an installment sale reporting the 40% down payment and whatever was received minus interest for 2010? Will the net profit (selling price - selling expenses - asset depreciation recpature) be taxed as capital gains?
2) Treat the interest portion of the notes as ordinary income - treat it the same way as interest received from my savings account?
3) I plan to repay the loan from friends in subsequent years (2011 and on). Can I treat them as expenses in later years? (notes payments in 2011 - payment to friends)
Thanks in advance!
I started a computer repair business with a 17,500 interest-free loan from friends in 2007. The structure is a self-proprietorship LLC (California) and the computer business as a DBA. I sold my DBA (retaining the LLC) this year (assets of $5000, rest as goodwill) and seller financed a portion of it as such:
40% down-payment
60% in notes with interest paid full in 5 years.
As for accounting taxes for the current year:
1) Can I treat the sale as an installment sale reporting the 40% down payment and whatever was received minus interest for 2010? Will the net profit (selling price - selling expenses - asset depreciation recpature) be taxed as capital gains?
2) Treat the interest portion of the notes as ordinary income - treat it the same way as interest received from my savings account?
3) I plan to repay the loan from friends in subsequent years (2011 and on). Can I treat them as expenses in later years? (notes payments in 2011 - payment to friends)
Thanks in advance!