Option fee and income tax (for seller)

[Sheik H.]

Hi,

In a lease option assignment, how does the seller account for the option fee (that was assigned to me, the investor) on the HUD1?

I mean, the full purchase price will be on the HUD1 along with the option fee (which was applied to the purchase price), but the seller never received the option fee. Looks like the seller will be paying income taxes on the option fee which he never received!

Am I off base here?

Thanks