Sale of Partnership

[Lion EA]

H&W MMLLC taxed as a partnership/1065 is negotiating to sell about July this year. Any good, readable cites I should use to start my study? What items of their sale will be taxed as ordinary income? Capital gain income? Service business (job fair for summer stock theaters, talent, tech staff) with the only physical asset an electric piano. Outstanding repeat client list. Thorough contact list. Name recognition. Buyer wants a non-compete clause. Probably an installment sale. They purchased the biz before I was their tax preparer (DIYers for many years). I haven't had a biz sell for years, so I need to start from scratch. That's why I want to start with readable sources before getting lost in the tax code. They've asked their financial advisor to be their sales agent. Initial meeting between sellers and buyers was discussing 3X net profit as potential price. That's all I know so far.

[Lee B]

Unfortunately your clients don't have any assets which qualify for installment sale capital gains treatment, even though the sales contract payments may be multiyear.

Therefore you are going to end up trying to balance capital gains on the sale of intangibles in the year of the sale against ordinary income spread over the years of the non compete agreement payments.