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

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The "wherewithal to pay" principle suggests that taxation should occur when the taxpayer has the means to pay the tax, which aligns with receiving installment payments over time.

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