Which of the following statements is true concerning the disposition of an installment note?
A)Deferred gain is not recognized by the transferor if the installment note is a non-taxable transfer to a controlled corporation.
B)Deferred gain must be recognized only if the installment note was transferred as a gift to a related party.
C)Transfer of an installment obligation to another party will not trigger immediate recognition of deferred gain.
D)Deferred gain must be recognized if the note is transferred to the owner's estate at his death.
E)None of these.

Question

Quizplus · Accepted Answer

Deferred gain is not recognized by the transferor if the installment note is transferred in a non-taxable exchange, such as a transfer to a controlled corporation. This is because the transfer is treated as a continuation of the original installment sale for tax purposes, allowing the deferral of gain to continue under the new ownership structure.

Which of the Following Statements Is True Concerning the Disposition