Tax Considerations for Selling Your Campground

Before You Sign a Letter of Intent (LOI) or Term Sheet

The number on the LOI is the gross price. What matters to you is what's left after taxes, and that depends on how the deal is structured — so model your after-tax proceeds before you get attached to a number.

A big piece of that is purchase price allocation: how the buyer assigns the price across asset classes — land, buildings, equipment, inventory, goodwill, a non-compete. Each of those is taxed differently to you, so this isn't a form to fill in after the fact, it's a term to negotiate before you sign.

It's also worth confirming your entity structure was actually built for a sale. If it wasn't, restructuring now — before anything is signed — can save real money later. And any unfiled returns, sales tax gaps, or old payroll tax issues are going to surface during diligence one way or another. Better to find them yourself first.

During Due Diligence and Negotiation

Once diligence starts, the buyer's side will want a clean, reconciled set of financials and your last three years of returns, and you should expect questions about your numbers — often called a "quality of earnings" review.

The purchase price allocation (IRS Form 8594) gets negotiated with the buyer's tax advisor here, before signing, not at tax season — both sides have to report the same numbers to the IRS. If part of your price is a seller-financed note, this is also when installment sale treatment (IRC Section 453) gets modeled: how much gain you'll recognize each year you receive a payment, and the fact that any depreciation recapture is taxed as ordinary income in the year of sale, regardless of the note's payment schedule.

Depending on how actively you've run the business, an additional 3.8% Net Investment Income Tax could apply to part of your gain — worth knowing before closing, not after. And every sales tax, payroll tax, and other business tax obligation needs to be current, since some states require a tax clearance certificate before the sale can close.

At Closing

The Form 8594 allocation gets finalized with the buyer's side. You'll also want to calculate the estimated tax payment you'll owe after closing to avoid an underpayment penalty, handle final payroll tax filings and W-2s/1099s for any employees or contractors, and confirm real estate taxes are prorated correctly.

After Closing

Form 8594 gets filed with your return for the year of sale, and if you're carrying a note, Form 6252 gets filed every year you receive a payment. This is also the point to decide whether to dissolve or keep the entity open, and to plan estimated tax payments for as long as the note is being paid down.

The Case for Hiring a Tax Advisor Who's Done This Before

A generalist tax advisor who's excellent at your annual return can still miss things that are specific to a business sale, and those misses are expensive. A purchase price allocation that isn't negotiated in your favor can shift real dollars from capital gains treatment into ordinary income. Missing the Net Investment Income Tax question, or misreading how installment sale treatment applies to your note, shows up later as a bigger tax bill or a letter from the IRS, not as a line item you can point back to and fix.

"Can't I just use my regular tax advisor?" — maybe, if they've actually handled a business sale before. Ask them directly (see "Questions to Ask Before You Hire" below). If they haven't, you're paying tuition either way: either a specialist's fee now, or the cost of the smaller mistakes a generalist is more likely to miss.

It's also just faster. Someone who's modeled this structure before can turn around a proposal and a plan in days, not weeks, instead of learning the rules alongside you while your closing date is already on the calendar. And their fee is usually small next to what a specialist catches or negotiates that a generalist would have let slide.

If You Don't Have a Tax Advisor Yet

Look for someone who can point to a specific deal they've worked on with a structure like yours — ideally an asset sale with a seller-financed note, not just a valuation engagement. See "Questions to Ask Before You Hire" below for what to ask candidates, and once you've narrowed it down, use the request-for-proposal below to get a real, written scope and fee instead of a vague hourly estimate.

Copy This and Send It to Your Tax Advisor

Subject: Request for Proposal — Campground Sale (Asset Purchase)

Hi [Tax Advisor Name],

I'm in the process of selling [Business Name], likely structured as an asset sale with the buyer paying part of the price in cash at closing and the rest through a seller-financed note over [X] years.

Before I sign anything, I'd like a proposal from you covering the following:

1. Modeling my after-tax proceeds under the buyer's proposed structure, including the effect of depreciation recapture

2. Reviewing and negotiating the purchase price allocation (Form 8594 / IRC Section 1060) with the buyer's tax advisor

3. Advising on installment sale tax treatment (IRC Section 453) for the seller-financed portion, including what must be reported in year one regardless of the note's payment schedule

4. Assessing whether Net Investment Income Tax could apply, based on my role in the business

5. Getting my books and the last three years of returns diligence-ready for the buyer's review

6. Coordinating final payroll, sales tax filings, and any state tax clearance certificates required at closing

7. Filing Form 8594, and Form 6252 in each year I receive a note payment

8. Advising on whether the entity should be restructured, wound down, or kept open after the sale

Please send me a written scope of work and a flat fee or fee range for the above, and a time we can meet to discuss it. At that time, I'd also like to hear about work you've already done that's similar to this.

Thank you, [Your Name]

In case you'd rather build your own request, or want to check a proposal you've already received against what a complete engagement looks like, that's exactly what the phase-by-phase breakdown above covers.

Questions to Ask Before You Hire

Have you handled an asset sale with a seller-financed note before, not just a business valuation?

Is this a flat fee or hourly? What's the estimated range for a deal this size?

Who on your team will actually be doing this work, and what are their qualifications?

What's your availability over the next few months? Deals move fast once diligence starts.

One More Thing

This is information, not tax advice. Every deal and every state has details that change the picture, which is exactly why you're hiring a tax advisor in the first place.

If you'd like a second set of eyes on your tax advisor's proposal, or you're not sure where to start, these might help:

If you're weighing whether to sell, or you just want to talk through what a fair, honest process looks like, EverHaven is glad to have that conversation. No pressure, no games — just a straight answer to whatever you're trying to figure out.