The S Corp is selling its assets?

Or the shareholder is selling his stock in the S Corp?

I was not aware you could sell a lease. Is it really being assigned?

Was a value assigned to the truck lease?

Do you have a copy of the sale agreement?

The S-Corp is selling its assets which is made up of a Truck and Inventory only. The business is not selling it's name nor stock. The sales agreement is an arrangement that the buyer is paying the seller $129K which is comprised of $60K for the value of a Truck which has a zero net book value as it was recorded as lease expense since it was purchased and inventory at cost. There is no gain on the inventory but not sure how to record the remaining amount related to the truck. The buyer also is paying the seller the amount over 3 years and only a cash down payment of $10K will be received in 2025 which relates to the lease balance owed on the truck. 

Is the S Corp cash or accrual?

They are selling/assigning the truck lease. They can't sell the truck since they don't own it. I think the $60K assigned to this is ordinary income. I don't think the lease is a capital asset. 

Worst case you have an installment sale but all income is reported in 2025 since it is all ordinary income.

Best case, only the $10K is reported in 2025. It is ordinary income. 

Question
If you acquire a piece of equipment for use in a trade or business, like a forklift or truck, are the payments you make deductible lease payments or do you instead depreciate the cost of the equipment?

Answer
You must first determine whether your agreement is a lease or a conditional sales contract. If the agreement is a lease, you may deduct the payments as rent. If the agreement is a conditional sales contract, you consider yourself as the outright purchaser of the equipment. You may generally recover the cost of such property used in a trade or business through depreciation deductions.

Whether the agreement is a lease or a conditional sales contract depends on the intent of the parties as evidenced by their agreement, which is read in light of the facts and circumstances when it was entered into. Determine the parties' intent based on the facts and circumstances that exist when you enter into the agreement. No single test, or special combination of tests, always applies.

However, in general, you may consider an agreement as a conditional sales contract (Rev. Rul. 55-540, 1955-2 C.B. 39) rather than a lease if one or more of the following conditions apply:

The agreement designates part of each payment towards an equity interest that you'll receive in the property.
You get title to the property upon the payment of a stated amount of "rental" payments required under the agreement.
The amount you must pay to use the property for a short time is an inordinately large part of the amount you would pay to get title to the property.
You pay much more than the current fair rental value for the property.
You have an option to buy the property at a nominal price compared to the value of the property when you may exercise the option. Determine this value when you enter into the agreement.
You have an option to buy the property for a small amount compared to the total amount you have to pay under the agreement.
The agreement designates some part of the payments as interest, or parts of the payments are easy to recognize as interest.

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses...  

Rightly or wrongly, OP said the payments were deducted as lease expense.