The income tax concept that is primarily responsible for the treatment of installment sales of property is the:
A)Administrative Convenience Concept.
B)Arm's-Length Transaction Concept.
C)Entity Concept.
D)Realization Concept.
E)Wherewithal-to-Pay Concept.

Question

Quizplus · Accepted Answer

The Wherewithal-to-Pay Concept is primarily responsible for the treatment of installment sales of property. Under this concept, taxable income is recognized in the year in which the taxpayer receives payment or in the year in which the payment becomes due, whichever is earlier. This ensures that the taxpayer has the ability to pay the tax as the income is received in installments over time.

The Income Tax Concept That Is Primarily Responsible for the Treatment