You can enter a note receivable, or an installment sale, as an investment asset.
Outside the software, figure the amortization of the note receivable or installment sale note, and the portion of each payment that is return of capital, interest income, and capital gain.
Create the asset. Enter just the description at the top level, nothing else. Then, go to the “more info” screen and do the following:
- “Return of capital portion” of income. Enter the first year’s return of capital in the line for tax-free income. Click “View/edit annual tax-free income,” and override the annual income from the investment with each year’s return of capital.
- “Interest income” portion. Enter the first year’s interest income in the line for interest income. Click “View/edit annual interest income,” and override the annual income from the investment with each year’s interest income.
- “Capital gain” portion. Enter the first year’s capital gain in the line for capital gain income. Click “View/edit annual capital gain income,” and override the annual income from the investment with each year’s capital gain income.
- Click “View/edit annual value of this asset,” and enter the declining value here, by overriding the value from the investment with each year’s value.
The sum of the cash flows from these entries will be the total cash flow from the note; the value will decline properly; and the tax results will be correct.
Please note: If there are liquidations, this will not work, because the overrides will interfere with the software’s ability to liquidate the asset.