If you’re an accountant preparing to sell your CPA firm, you’ve likely considered seller financing as part of your deal structure. It’s a common, flexible tool that can help bridge the gap between buyer and seller—but there’s a critical detail that’s often overlooked: interest rates.
At Naab Consulting, we’ve helped hundreds of accountants navigate the sale of their practice with expert-level precision. And one of the most common deal-killers we see? A buyer proposing 0% interest on a seller-financed promissory note.
Sounds harmless, right? Unfortunately, the IRS strongly disagrees.
Understanding Imputed Interest and the Applicable Federal Rate (AFR)
Here’s the catch: The IRS requires a minimum interest rate, known as the Applicable Federal Rate (AFR), to be charged on any private loan—including those involved in accounting practice sales. If you agree to 0% interest, the IRS will impute interest income and tax you on what you should have earned, not what you actually received.
Let’s break that down:
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Imagine a $500,000 seller note at 0% interest.
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If the AFR is 4%, the IRS assumes you earned $20,000 per year in interest.
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Even though you didn’t receive a dime of that, you’ll still be taxed as if you did.
That’s thousands in unnecessary taxes—money right out of your pocket.
Why Smart Brokers Like Naab Consulting Guide Sellers Away from Zero-Interest Pitfalls
We’ve been brokering accounting practices for over two decades, and we know what traps to avoid. One of the key roles of a professional accounting broker is structuring deals to protect the seller’s financial and tax interests.
When buyers propose 0% interest loans, they’re often unknowingly shifting tax risk and inflation loss to the seller. That’s a bad faith move—even if it’s unintentional. At Naab Consulting, we work to ensure:
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Promissory notes are structured using the current AFR or a reasonable interest rate,
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Sellers are educated on tax consequences, including imputed interest risks,
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Deals are fair, balanced, and built to last through transition and beyond.
Selling Your Accounting Practice? Work with Professionals Who Know the Pitfalls
Whether you’re looking to retire, downsize, or simply move on from your CPA firm, choosing the right broker is essential. Naab Consulting specializes in accounting practice sales, and we handle the details—from valuation and marketing to deal structuring and buyer vetting.
We help sellers avoid costly mistakes like 0% interest offers and ensure you’re protected every step of the way.
Ready to sell your accounting practice the right way?
Contact Naab Consulting today at 888-726-6282 or Info@NaabConsulting.com for a confidential, no-obligation consultation.