Installment Sale

In United States income tax law, an installment sale is generally a "disposition of property where at least 1 payment is to be received after the close of the taxable year in which the disposition occurs." The term "installment sale" does not include, however, a "dealer disposition" (as defined in the statute) or, generally, a sale of inventory. The installment method of accounting provides an exception to the general principles of income recognition by allowing a taxpayer to defer the inclusion of income of amounts that are to be received from the disposition of certain types of property until payment in cash or cash equivalents is received. The installment method defers the recognition of income when compared with both the cash and accrual methods of accounting. Under the cash method, the taxpayer would recognize the income when it is received, including the entire sum paid in the form of a negotiable note. The deferral advantages of the installment method are the most pronounced when comparing to the accrual method, under which a taxpayer must recognize income as soon as he or she has a right to the income.

Read more about Installment SaleProcess, Electing Out and Contingent Payments, Treatment of Escrowed Consideration, Impact, Alternatives

Other articles related to "sales, installment sale, sale":

Deferring or Reducing Capital Gains Tax
... be deferred or reduced if a seller utilizes the proper sales method and/or deferral technique ... There are many such sales techniques and methods, each of which has its benefits and drawbacks ... Installment Sale - Defer capital gains by taking payments from a buyer over a period of years ...
Capital Gains Tax In The United States - Deferring And/or Reducing - Deferment Strategies
... Capital gains tax can be deferred or reduced if a seller uses the proper sales method and/or deferral technique ... gains taxes with tax planning strategies such as the structured sale (ensured installment sale), charitable trust (CRT), installment sale, private annuity trust (no longer valid ... Deferred sales trust – Allows the seller of property to defer capital gains tax due at the time of sale over a period of time ...
Private Annuity Trust
... without directly selling them and incurring substantial taxes from their sale ... A PAT can defer 100% of the United States federal capital gains tax due on the sale of an asset, provide a stream of income, and effectively remove the ... capital gains taxes, such as the charitable remainder trust (CRT), installment sale, or tax-deferred 1031 exchange ...
Installment Sale - Alternatives
... A sales method called the Structured sale, also known as the Ensured Installment Sale, is a variation of the traditional installment sale and is intended to protect the seller completely from the risk in ...

Famous quotes containing the words sale and/or installment:

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