Sale of a leased vehicle
I have a owner of a business 1120-S that is selling it's business to a third party with payment terms over a 36 month period. They are selling the business truck that was set up as a lease whereby the monthly lease payment was 100% expenses and the parts inventory (as the business is an automotive distributor) will also be sold to the buyer. My question is how is the gain or loss calculated on the leased vehicle since no depreciation was taken and only rent expense as paid on the lease? Also since it is a 3 year sale arrangement I will do the final return for the business and recognize the proceeds paid over the remaining years as miscellaneous income on the sellers personal return? I have not had this type of sale of a business before. Your assistance will be greatly appreciated.
