Ramon, Clarita, and Juan are shareholders in the computer consulting firm, 3Geeks. Since the business has had
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Ramon, Clarita, and Juan are shareholders in the computer consulting firm, 3Geeks. Since the business has had several years of success, Juan is ready to leave the business and requests to be bought out. After negotiations among the owners, it is agreed that Juan will receive $300,000 for his stock and $500,000 for agreeing not to provide any computer consulting services for one-year starting October 1 of the current year.
This $500,000 is the same amount Juan was guaranteed to receive each year as as salary. How should 3Geeks treat the $500,000 payment to Juan?
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Related Book For
Federal Tax Research
ISBN: 9781111221645
9th Edition
Authors: William Raabe, Gerald Whittenburg, Debra Sanders, Roby Sawyers, Steven Gill
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