Hi,
I am having trouble tracking down information on how to appropriately file your taxes in regards to lonnie deal income. Can someone lead me in the right direction or provide me with some concise verbiage I can pass on to my accountant. He is a bit stumped and is hoping I can find the answer quickly without him having to do a ton of digging.
Do I get taxed on the profits up front? Or is it “cash method” and only on what I receive for the year?
Thanks in advance!
Basically, you can choose to use accrual based accounting or cash basis accounting. If you use a cash base accounting you can come to a value (discounted from face value) of the notes receivable, and that would be used for calculating your gain.
Or, by using the accrual method - you pay on unrealized gains- but you also deduct the amount due at time of repo as a loss.
search “insomnia” in the archives John Hyre wrote a very good post several years ago.
Thanks Shawn for the help. I will look to the archives as well.