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Installment Sales

Course - Installment Sales

Major Topics

Learning Objectives

  1. Recognize the importance, particularly in tax deferral, of the installment method and, identify ?453 requirements and installment method terminology.
  2. Specify the imputed interest, OID, and ?1038 repossession rules affecting installment sales and subsequent repossessions.
  3. Identify the following ?453 pitfalls and complexities: the related party limitation, the regulations governing the use of the installment sale method in like-kind exchanges, and the contingent payment sale rules.
  4. Determine how to allocate and report installments payments among identified asset classes using R.R. 76-110 and the residual method recognizing ?453 prohibitions on certain assets regarding dealer dispositions and inventory.
  5. Identify the amount of interest payable on tax-deferred income when ?453 dispositions exceed $5 million and circumstances considered taxable dispositions of installment obligations to determine when any gain or loss is recognized.

Course Description

An installment sale is a sale of property where one or more payments are received after the close of the tax year. This mini-course discusses the particulars of installment sales, including requirements, calculation, and pitfalls. Cross issues such as a combined installment sale and like-kind exchange, the impact of related parties, pledging, repossession, and contingent payments are reviewed. Also, the importance of recognizing the dangers of dealer status, inventory, purchase price allocation, and installment note disposition are emphasized.

Compliance Information

Advanced Preparation

None

Field of Study

Taxes

Credits

2 Credits

Published Date

January 27, 2023

Revision Date

February 29, 2024

Course Authors

Danny Santucci

Huntington Beach, CA
Author, Santucci Publishing

Danny earned his Bachelor of Arts in Political Science from the University of California at Irvine in 1969. He received his Juris Doctorate from Boalt Hall School of Law, University of California at Berkeley in 1972, at which time he began practice as a tax attorney in Southern California. His legal career started with the business and litigation firm of Edwards, Edwards, and Ashton. Later he joined the Century City entertainment firm of Bushkin, Gaims, Gaines & Jonas working for many well-known celebrities. In 1980, Danny established the law firm of Santucci, Potter, and Leanders, in Irvine, California. With increasing lecture and writing commitments, Danny went into sole practice in 1995. His practice emphasizes business taxation, real estate law, and estate planning.

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Overview

An installment sale is a sale of property where one or more payments are received after the close of the tax year. This mini-course discusses the particulars of installment sales, including requirements, calculation, and pitfalls. Cross issues such as a combined installment sale and like-kind exchange, the impact of related parties, pledging, repossession, and contingent payments are reviewed. Also, the importance of recognizing the dangers of dealer status, inventory, purchase price allocation, and installment note disposition are emphasized.

Course Details

  1. Recognize the importance, particularly in tax deferral, of the installment method and, identify ?453 requirements and installment method terminology.
  2. Specify the imputed interest, OID, and ?1038 repossession rules affecting installment sales and subsequent repossessions.
  3. Identify the following ?453 pitfalls and complexities: the related party limitation, the regulations governing the use of the installment sale method in like-kind exchanges, and the contingent payment sale rules.
  4. Determine how to allocate and report installments payments among identified asset classes using R.R. 76-110 and the residual method recognizing ?453 prohibitions on certain assets regarding dealer dispositions and inventory.
  5. Identify the amount of interest payable on tax-deferred income when ?453 dispositions exceed $5 million and circumstances considered taxable dispositions of installment obligations to determine when any gain or loss is recognized.

Intended Audience

Advanced Preparation — None

Field of Study — Taxes

Credits — 2 Credits

IRS Program Number

Published Date – January 27, 2023

Revision Date – February 29, 2024

Course Authors

Danny Santucci

Huntington Beach, CA
Author, Santucci Publishing

Danny earned his Bachelor of Arts in Political Science from the University of California at Irvine in 1969. He received his Juris Doctorate from Boalt Hall School of Law, University of California at Berkeley in 1972, at which time he began practice as a tax attorney in Southern California. His legal career started with the business and litigation firm of Edwards, Edwards, and Ashton. Later he joined the Century City entertainment firm of Bushkin, Gaims, Gaines & Jonas working for many well-known celebrities. In 1980, Danny established the law firm of Santucci, Potter, and Leanders, in Irvine, California. With increasing lecture and writing commitments, Danny went into sole practice in 1995. His practice emphasizes business taxation, real estate law, and estate planning.

About Instructor Read Less