Covenant Not To Compete

[BOB W]

Bob: I just read further here and the first installment of 60,000 is due October 1st of the next year

So, the installment payments are due annually? Is there still a down payment of $30,000 + $30,000.????????

[DONNA ASTON]

Bob: I just read further here and the first installment of 60,000 is due October 1st of the next year

[BOB W]

no all I have right now is the agreement and it states in October

OK> I going to assume it was October 14, 30days after the sale and 60 days for the first $5,000 payment...OK???

[DONNA ASTON]

no all I have right now is the agreement and it states in October

[BOB W]

sorry my error sale date is Sept 14 and the last 30,000 is due in october.

Do you know what date it was paid in October?

[DONNA ASTON]

sorry my error sale date is Sept 14 and the last 30,000 is due in october.

[veritas]

Could be

Yes and No... $30,000 down and $30,000 at the end of the year. The original sale date to the end of the year also involves interest on the second $30,000. ????? What was the sale date?

Hard to tell from the facts given.

[BOB W]

i'm totally confused now. My sales price is stated in agreement and again my 6252 and 4797 don't look right. Then I'm looking at the example in THE TAX BOOK and more confused sorry knew this was a pain from beginning that is why the person doing 1040 didn't want it

Just give me the sale date. Ignor the sale price. For IRS purposes it is not the sale price.

[DONNA ASTON]

i'm totally confused now. My sales price is stated in agreement and again my 6252 and 4797 don't look right. Then I'm looking at the example in THE TAX BOOK and more confused sorry knew this was a pain from beginning that is why the person doing 1040 didn't want it

[BOB W]

$240,000 with unstated interest? My thinking is that is the amount too look at for computing interest.

Yes and No... $30,000 down and $30,000 at the end of the year. The original sale date to the end of the year also involves interest on the second $30,000. ????? What was the sale date?

[veritas]

The note will be for

The sale price has to be reduced because a portion of it is interest. The total deal with interest has to equal $300,000 because the interest rate is not stated.

$240,000 with unstated interest? My thinking is that is the amount too look at for computing interest.

[DONNA ASTON]

Bob

5% the installment is for 5 years 60,000 per year

[BOB W]

confused now. The sales price is $300,000. The contract balance is $240,000? Which means some part of 240,000 will be interest?

The sale price has to be reduced because a portion of it is interest. The total deal with interest has to equal $300,000 because the interest rate is not stated.

[DONNA ASTON]

Bob

the 300,000 is on the sale agreement and orginal post

[BOB W]

yes your correct. Thank you I understand the interest must be calculated. I am on the computer and having problems with the 6252 it doesn't look correct.

If you give me the interest rate you are going to use and the term of the installment period I can generate an amortization schedule to be used showing principle and interest annually. In this case there may be a stated payment amount and I will need that also.