This course is specifically for Enrolled Agents that need to report to the IRS.

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.

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. 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.

Revision Date: 2/28/2024

Additional Contents : Complete, no additional material needed
Advance Preparation : None
Intended Participants : Any CPA looking to maintain or enhance their professional competence
Course Declaration : Participants must complete the final examination within one year of purchase. A minimum passing grade of 70% or better is required to receive CPE
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