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Author: |
Danny C Santucci, JD |
Course Length: |
Pages: 29 ||| Word Count: 15,723 ||| Review Questions: 10 ||| Final Exam Questions: 10 |
CPE Credits: |
2.0 |
IRS Credits: |
2 |
Price: |
$17.95 |
Passing Score: |
70% |
Course Type: |
Text - IRS Enrolled Agents |
Technical Designation: |
Technical |
Field Of Study: |
Taxes |
Approved Audience: |
NASBA QAS - NASBA Registry |
Key Takeaways: |
This mini course discusses the particulars of installment sales, including requirements, calculations, and pitfalls under section 453.
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Frequently Asked Questions: |
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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, calculations, 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. |
Usage Rank: |
10833 |
Release: |
2006 |
Version: |
1.0 |
Prerequisites: |
General understanding of federal income taxation. |
Experience Level: |
Overview |
Additional Contents: |
Complete, no additional material needed. |
Additional Links: |
Internal: “Property Dispositions - Tax Mini‑Course” on CPEThink
Internal: “Assets Income and Cash Tax - CPE Course” on CPEThink
External: “Installment Sales” - Topic 705 on IRS.gov
External: Installment Sale
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Advance Preparation: |
None. |
Delivery Method: |
QAS Self Study |
Intended Participants: |
Anyone needing Continuing Professional Education (CPE). |
Revision Date: |
04-Sep-2026 |
NASBA Course Declaration: |
Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam. |
Keywords: |
Installment Sales - Tax Mini Course - CPE course for CPAs |
Learning Objectives: |
Learning Assignment & Objectives As a result of studying the assigned materials, you should be able to meet the objectives listed below. ASSIGNMENT At the start of the materials, participants should identify the following topics for study: * Installment method * Installment income * Imputed interest & OID * Related party sales * Like-kind exchanges * Contingent payments or price * Sale of a business * Dealer dispositions * Installment notes in excess of $5 million * Dispositions of installment obligations Learning Objectives After reading the materials, participants will be able to: 1. Recognize the importance, particularly in tax, as payments are received, 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 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 installment payments among identified asset classes and the 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 Contents: |
Chapter 1 - Installment Sales Installment Method Requirements Formula Dealers Special Rule Sale at a Loss Installment Income Interest Income Gain Definitions & Terminology Installment Sale Selling Price Selling Price Reduction Allocation Basis & Adjusted Basis Installment Sale Basis Selling Expense Gross Profit Contract Price Gross Profit Percentage Income from Sale Payments in Year of Sale Electing Out of the Installment Method Selling Price Fair Market Value How to Elect Out When to Elect Out Payments Buyers Note Assumed Expenses Mortgage Assumed Mortgage Less Than Basis Mortgage More Than Basis Wrap-around Mortgages Mortgage Canceled Debts Payments of Property Fair Market Value Third-Party Notes Bonds Guarantees Deposits Pledging Limit on Payment Treatment Exception Escrow Accounts Escrow Established In a Later Year Substantial Restriction Recapture Imputed Interest & OID Complexity Sale at a Loss Section 483 - Imputed Interest Exemptions Imputed Interest Rates Small Transaction Exception Intra-family Land Exception Timing Sections 1271-1274 Original Issue Discount (OID) OID Rates Timing Cash Method Debt Instrument Exception Computation of OID Personal Use Property - Buyers Deduction of Imputed Interest Repossession Section 1038 - Repossession by Seller Repossession of Principal Residence Related Party Sales Sale of Depreciable Property Exception Resale Rule Related Persons Exceptions Like-Kind Exchanges Installment Payments Final Regulations & Delayed Exchanges Contingent Payments or Price Installment Sales Revision Act of 1980 Contingent Payment Sale Maximum Selling Price Transactions Recomputation Fixed Payment Term Transactions Losses Transactions with Neither Maximum Selling nor Fixed Payment Term Losses Income Forecast Method Election Calculation Special Rules Qualification Single Sale of Several Assets Sale of a Business Residual Method How to report Inventory Sale of Partnership Interest Dealer Dispositions Definition Residential Lot & Timeshare Exception Interest Computation Qualification Installment Notes in Excess of $5 Million Computation of Interest Definitions Pledging Dispositions of Installment Obligations Gain or Loss Exceptions Substitution Tax-free Transfers Transfers Between Spouses or Former Spouses Gifts Cancellation Forgiving Part of the Debt Assumptions Death Transfers Basis Sale of Future Cash Flow Glossary |
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