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do you pay social security, federal etc.on the payment you receive each year from the sell of business or just

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William A. Price
Business Lawyer
DuPage County, IL

The answer depends on how your sale was structured. If the payment is made as principal and interest on a seller's loan of some of the purchase price to the buyer, then the principal amount in each annual payment may be realization of capital gains on the purchase, while the interest paid is ordinary income. If you had a guaranteed job, then your salary will be subject to salary-based taxes like other W-2 employees. If you have guaranteed dividends, then you will be receiving dividend income, which is subject to federal income taxes, but may not be income from employment. Consult a tax lawyer or accountant about getting payment streams that are tax minimized.

Dec 30, 2013

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