FAQs

Question: How can I Handle Installment Sales and Notes Receivable?

Answer: You can enter a note receivable, or an installment sale, as three investment assets.

You can label them:

1. Note receivable return of capital.

2. Note receivable interest income.

3. Note receivable capital gain.

Outside the software, figure the amortization of the note receivable or installment sale note, and the portion of each payment that is return of capital, interest income, and capital gain.

At the top level of each Cash & Investment entry, leave the value and incomes blank.

You will make all your entries by clicking to the "more info" screen, and then clicking the following links on that page:

View/edit annual value of this asset.

View/edit annual income from the asset.

1. "Return of capital portion" of income. Click "View/edit annual income from the asset," and override the annual income from the investment with each year's return of capital. Click "View/edit annual value of this asset," and enter the declining value here, by overriding the value from the investment with each year's value. At the top level, specify the tax category of this investment as "tax free."

2. "Interest income" portion. Click "View/edit annual income from the asset," and override the annual income from the investment with each year's interest income. At the top level, specify the tax category as "interest income."

3. "Capital gain" portion. Click "View/edit annual income from the asset," and override the annual income from the investment with each year's capital gain income. At the top level, specify the tax category as "capital gain."

The sum of the cash flows from these entries will be the total cash flow from the note; the value will decline properly; and the tax results will be correct.

Caveat: If there are liquidations, this will not work, because the overrides will interfere with the software's ability to liquidate the asset.