The seller keeps receivables but I collect them. Are deposits my sales?

Collection responsibility does not by itself determine ownership of the income. Separate money collected as agent for the seller from receipts earned by the acquired business after closing.

A business-owner scenario

A practice buyer uses the same payment portal for old and new patient balances. All deposits reach one account, and the seller receives a monthly settlement. Recording every deposit as buyer revenue can obscure amounts owed to the seller and distort cash available to operate.

Illustrative scenario, not a client result.

Work through the transaction

1. Define who owns each receivable by service date.
2. Reconcile collections, refunds and fees to the purchase terms.
3. Maintain a settlement account distinct from current sales.

The mistake that changes the result

Netting seller payments against revenue without tracking gross collections can make both parties' records difficult to reconcile.

Records that resolve the question

• Receivables schedule at closing.
• Collection agreement.
• Processor reports.
• Monthly seller settlements.

The decision to document

Ask for a cutoff protocol and a sample month reconciliation before migrating systems. Confirm how refunds and disputed balances are handled so the buyer's books do not silently absorb the seller's obligations.

Which fact changes the answer?

Refunds on pre-closing work need a responsible party just as collections do. Establish how chargebacks, processor fees and disputed accounts enter the settlement. A clean gross-to-net reconciliation protects the buyer's operating revenue from transition noise.

Explore buying a business advisory · Discuss your situation with AE Tax Advisors

Related owner questions

• The seller's cars are still on the books. Did I buy them?
• The seller wants consulting fees paid to a new LLC. Does that change my tax?

Sources and scope

• IRS Form 8594 instructions: acquisition allocation
• IRS Publication 544: asset dispositions

General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.