Purchase price change on Installment Sale

[outwest]

The taxpayer has a 2 year old installment sale with monthly payments for real estate. The buyers have been late then caught up. Then a dispute arose over the equipment in the sale. The sellers agreed to a reduction in the note balance to settle the dispute.

How do we adjust the installment sale reporting to reflect the lower purchase price? Change gross profit percentage or what?


Doug

[Bees Knees]

You recalculate the gross profit percentage in the year that you have increased costs, or a decrease in the purchase price.