The accrual basis taxpayer sold land for $100,000 on December 31, 2018. He did not collect the $100,000 until January 2, 2019. The land was held as an investment.

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When property is sold on an installment basis, the gain is usually recognized in the year of sale. However, if the taxpayer elects to use the installment method, the gain can be spread out over the period of time that payments are received. If the taxpayer does not elect to use the installment method, the entire gain must be recognized in the year of sale.

In this case, since the taxpayer did not receive payment until January 2, 2019, the gain would normally be recognized in 2019. However, if the taxpayer's basis in the land was $60,000, and the sale price was $100,000, the entire gain may be eligible for installment sale treatment. In this case, the taxpayer could elect to use the installment method and spread the gain out over the period of time that payments are received. If the taxpayer does not elect to use the installment method, the entire gain must be recognized in 2019.

The Accrual Basis Taxpayer Sold Land for $100,000 on December