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contract price |
Also found in: Acronyms, Wikipedia | 0.02 sec. |
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contract price A tax term used in the calculation of gain realized on an installment sale. It is the selling price, minus any mortgage debt assumed by the buyer, plus the excess of any such liens collected in addition to the seller's equity in the property. Contract Price With respect to an installment sale, one of the amounts used to compute the percentage of each principal payment that is taxable as gain. The contract is equal to the gross selling price when no mortgages are assumed. If a mortgage is assumed, the contract price is the gross selling price minus the amount of the mortgage plus the excess (if any) of the mortgage over the seller's basis and expenses of sale. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| Taxpayers include in income a portion of the total contract price based on costs incurred and allocable to the long-term contract. Your risk is that futures and/or basis fall before you set the contract price. Once a job is complete and the actual costs and contract price become known, the contractor "looks back" at each prior tax year the project was in process and calculates the amount of tax he would have owed had he used actual figures rather than estimates. |
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