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Purchase price change on Installment Sale

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    Purchase price change on Installment Sale

    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

    #2
    You recalculate the gross profit percentage in the year that you have increased costs, or a decrease in the purchase price.

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