Contingent Payment Sale

AAA

DEFINITION of 'Contingent Payment Sale'

A type of installment sale in which either the price or payment period for the asset has not been fixed. Contingent payment sales entail a special set of rules that vary according to whether the price or the schedule is the fixed amount. For example, if you sell your business and part of the price includes a share of future revenues or profits, this would be a contingent payment sale.

INVESTOPEDIA EXPLAINS 'Contingent Payment Sale'

Because the final amounts in these transactions are uncertain, it is difficult to calculate tax liability for any capital gains. The methods for calculating tax liability for contingent payment sales transactions include determining a maximum selling price or, alternatively, determining a fixed period during which payments will be made by the buyer to the seller.

RELATED TERMS
  1. Contingent Shares

    Shares of company stock that are issued only if certain conditions ...
  2. Conditional Sales Floater

    A type of insurance that protects a seller of property that is ...
  3. Contingent Asset

    An asset in which the possibility of an economic benefit depends ...
  4. Contingent Liability

    A potential obligation that may be incurred depending on the ...
  5. Distressed Sale

    When property, stocks or other assets are sold in an urgent manner, ...
  6. Payment

    The transfer of one form of good, service or financial asset ...
Related Articles
  1. Competitive Advantage Counts
    Active Trading

    Competitive Advantage Counts

  2. Increase Your Disposable Income
    Options & Futures

    Increase Your Disposable Income

  3. 3 Common Tax Questions Answered
    Taxes

    3 Common Tax Questions Answered

  4. 401(k) Plans For The Small Business ...
    Entrepreneurship

    401(k) Plans For The Small Business ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center