The installment method applies where a payment will be received after the tax year of the sale:
A) By an investor who sold real estate at a gain.
B) By an investor who sold real estate at a loss.
C) By an appliance dealer who sold inventory at a gain.
D) By an investor who sold IBM Corporation common stock at a gain.
E) None of the above.

Question

Quizplus · Accepted Answer

The installment method is commonly used by investors who sell real estate at a gain and receive payments after the year of sale. This method allows the taxpayer to defer paying taxes on the gain until they receive payments from the buyer.

The Installment Method Applies Where a Payment Will Be Received