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Level 5
January 13, 2021
Solved

covenant not to compete

  • January 13, 2021
  • 2 replies
  • 13 views

Can a covenant not to compete be part of the installment sale, or does all the gain need to be recognized in the year of the sale?  

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Best answer by sjrcpa

Yes and no. It's ordinary income. Taxable each year as paid.

2 replies

sjrcpa
sjrcpaAnswer
Level 15
January 13, 2021

Yes and no. It's ordinary income. Taxable each year as paid.

The more I know the more I don’t know.
jlew1229Author
Level 5
January 13, 2021

Thank you !!  

sjrcpa
Level 15
January 13, 2021

You're welcome

The more I know the more I don’t know.
George4Tacks
Level 15
January 13, 2021

You may also need to file Form 8594. 

Answers are easy. Questions are hard!