Business Starting Grants - I am selling a business, but will be paid over 10 years. Will I pay all taxes when the business is sold?

I am selling a business, but will be paid over 10 years. Will I pay all taxes when the business is sold?

I am considering selling my retail business, but will not receive all the money up front. The buyer will pay an initial sum and then a yearly amount for ten years. Will I owe taxes on the entire amount of the sale even if I have not recieved the cash in hand?

Public Comments

You have an installment sale, taxes will be spread out as you collect your profit. See form 6252. You may elect out and pay all in the year of sale if you wish.
For an installment sale, you'll report and pay taxes on the money each year as it comes in.
No, you will not be taxed on the entire gain upon the sale. Even the downpayment you receive will be broken into taxable and nontaxable parts. The payment to you that represents the return of your investment in the property will not be taxed to you. Only the gain will be taxed. After the initial downpayment to you, each payment will include a nontaxable return of your investment, a taxable gain, and taxable interest. This is computed each year on Form 6252 which you file with your tax return.
You are getting paid on the installment method and will recognize your profit yearly based on the amount you get paid. If you are selling your business for say $250,000 profit, and getting paid it over the course of 10 years, then your yearly profit would be $25,000 and that is what you would be taxed on.