This year Henry realized a gain on the sale of an antique car that he inherited from his uncle. The buyer has promised to pay Henry in installment payments over the next few years. Identify the principle that will determine when Henry should be taxed on the gain from the sale:

Question

Quizplus · Accepted Answer

The "wherewithal to pay" principle suggests that Henry should be taxed on the gain when he actually receives the installment payments, as it aligns with his ability to pay the tax.

This Year Henry Realized a Gain on the Sale of an Antique