Deferred Payment Sales: The Installment Sale Provisions Re-examined

Ellsworth W. Jones, Deferred Payment Sales: The Installment Sale Provisions Re-examined, 1 Gonz. L. Rev. 53 (1966). 


The gain from a sale of real or personal property issubject to an income tax in the year of sale. This isacceptable to taxpayers when the entire sale price is receivedin cash and the transaction is closed.  Frequently, however, the sale is made on deferred payment terms, i.e.,the buyer makes a cash down payment and also obligateshimself to pay the balance of the purchase price over a period of time. If the transaction is considered closed for tax purposes, the seller is forced to pay income tax on unreceived profit. There are three methods of reporting gain to avoid this result. They are: (1) the deferred payment method, (2) the cost recovery method, and (3) the installment reporting method . . . Read More

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