Assignment task:
Taxpayer P, the purchaser, agrees to purchase from Taxpayer S, the seller, a single depreciable asset used by S in his trade or business (a single-member LLC treated as a sole proprietorship) for total purchase price is $10 million. The asset in question is depreciable tangible property (machinery) purchased by S for original purchase price by S of $4 million, used by S in the business, held for more than one year, and depreciated to a current tax basis in the hands of S of $1 million (i.e., the $4 million of original tax basis has been reduced by $3 million of depreciation to $1 million of remaining tax basis). There is no qualified indebtedness. P agrees to pay S a total of $10 million for the depreciable asset and the transaction is structured as a contingent installment sale with a maximum stated selling price of $20 million, with a $10 million payment due at closing, but plus a contingent payment of up to an additional $10 million, based on the profitability of P's business in the first 24 months of operations after purchasing the equipment, which contingent payment is due and payable on the second anniversary date