I asked this in the LLC section but haven't gotten any response, so I'm posting here:

I'm not sure if this belongs here or in the Capital Gains section, but here's my question:

My family has a C Corp that is a partner in a LLC that owns farm ground. If the LLC were to sell the farm ground with seller financing, how is that taxed? For example purposes, let's assume the property is sold for $300,000 with 20% down & financed at 7% (5 year balloon on 20 year amortization schedule). It has a cost basis of $100,000 and debt of $50,000.

Do we pay capital gains on the total sales price less basis up front when we sign the deal, or as we receive the money? And I'm assuming the interest income will be taxed at each partners regular income tax rate?

I've never faced this before but it is being brought up as an option.