I'm selling a website that I've been running for 3 years and have put significant time/energy/money into it. I understand this would be considered a long-term capital gain when it sells.
I'm looking to structure the sale at 1/2 cash & 1/2 promissory note at 0% interest for 1 year.
How are monthly note installments considered relative to capital gain tax laws? Would these installment payments be treated the same as the down payment that's made in cash or be considered 'ordinary income'?
Is there a certain way to structure the language in the note to allow for the least amount of tax responsibility?
Yo are talking apples and oranges. Capital gains are related to your basis not the form of payment. If you are a cash basis taxpayer, you pay taxes when you receive cash beyond your basis. We can help you with structure.