Agreement fee

A farming client is entering into an agreement with a marketing company to seek a buyer for land that has been earmarked for residential development.

The company will do all of the marketing and find a purchaser/developer. In return it will be paid a percentage of the eventual sale price as a fee.

The marketing company will pay my client a “non-returnable deductible agreement fee”. Presumably this is to encourage my client to use their services as opposed to another’s.

This fee is non-returnable by my client should the marketing company not find a developer. If it does the fee will be deducted from the marketing company’s percentage charge.

Because the percentage charge might not happen at all or be at some undetermined point in the future what are the tax consequences for my client when they receive this initial agreement fee? Is it taxable on receipt?...