Farmland installment sale

[Black Bart]

Client selling land only (no buildings-no improvements) for $180K -- wants to take $60K now, $60K January-'09 and $60K Jan. 2010. I haven't done one of these in a long time and can't think of any problems -- no depreciation to recapture and just use 6252. Is that right -- anything changed?

Something else; his regular income's 25% bracket -- does the zero cap gain deal only work with 15% bracket people or can he get some of that?

[Snaggletooth]

Nothing exotic

Bart, I don't pretend to know all the new stuff, but I don't think anything has happened that would defeat your client's strategy.

The "regular" tax bracket from the tax rate tables would have to be 15% to take advantage of the zero rate for this year. Not only that but the income which generates that "regular" rate must now include the $60K. The 15% maximum still holds true, however, but only on the 60K.

[Black Bart]

Thanks, dude

That's exactly what I need to know.

[erchess]

Fly In the Ointment

I believe that the IRS will require "imputed interest". I have never done an installment sale where the contract did not include what I thought was a reasonable amount of interest but I have a mental note to do research if it ever comes up..

[Burke]

I believe you are correct on that.