Tax treatment of money not received....

I sold my company in 2007. My basis was small. They paid me 50% in cash and put 50% into an escrow account to be used for environmental remediation. I might not get any of that if the remediation goes bad, or I might get it all back plus appreciation in 10 years if all goes well. I have to pay income on income the account makes. I have no control over it, except to go to arbitration if the buyers misuse it. (I had to threaten to do that repeatedly the first few months, but they seem to have calmed down now.)

At the time my accountant said I would pay capital gains on the 50% I got this year, and the rest when I got it. How does the basis work into this? Do I use half the basis for each, or all the basis for the first 50% and zero basis for the remainder. In March I will find out my accountants opinion, but I am curious now. There were some major tax events; I am thinking about getting TaxCut now and seeing how things will work out. Obviously they will be issuing updates, but will it be reasonable correct now?

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Taxlover
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Yes, except for any last-minute changes that Congress might make. Those could be significant, especially if you are subject to AMT.

Bob Sandler

Reply to
Bob Sandler

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