The accrual basis taxpayer sold land for $100,000 on December 31, 2014. He did not collect the $100,000 until January 2, 2015. The land was held as an investment.

Question

Quizplus · Accepted Answer

According to the installment method, a taxpayer may elect to report the gain from the sale of property over the period of time in which payments are received rather than recognizing the gain in the year of sale. In this case, since the taxpayer did not receive the full payment until 2015, they would have the option to report the gain over the period of time in which payments are received. However, if the taxpayer chooses not to use the installment method, the gain would be recognized in 2015 since that is the year in which payment was received. The taxpayer's basis in the land is not relevant to the timing of the gain recognition, as it only affects the amount of gain or loss reported.

The Accrual Basis Taxpayer Sold Land for $100,000 on December