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Installment Sales - Mini CourseCode: 24-INSTALL2
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Course description and objectives:
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.
After reading the materials, participants will be able to:
1. Analyze the importance, particularly tax deferral, of the installment method, list three requirements to use the method, and define basic installment method terminology.
2. Apply the imputed interest, OID and §1038 repossession rules to installment sales and subsequent repossessions.
3. Identify and explain 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. Allocate and report installments payments among identified asset classes using R.R. 76-110 and the residual method noting §453 prohibitions on certain assets regarding dealer dispositions and inventory.
5. Compute the amount of interest payable on tax-deferred income when §453 dispositions exceed $5 million and identify circumstances considered taxable dispositions of installment obligations to determine when any gain or loss is recognized.
Presentation Method: Self-Study
CPE credit: 2 Hours
Program Level: Update
Advance Preparation: None
Exam expiration date: Participants must submit exams for grading within one year from the date of purchase