Installment Sales Reporting Under Section 453: Avoiding Pitfalls

Contingent, Related Party, Depreciation Recapture, and Large Installment Sales

A live 110-minute CPE webinar with interactive Q&A


Tuesday, November 17, 2020

1:00pm-2:50pm EST, 10:00am-11:50am PST

(Alert: Event date has changed from 9/1/2020!)

or call 1-800-926-7926

This webinar will address the various tax issues surrounding use of the installment sales method of reporting (“installment method”) on the sale of property. Unique scenarios affecting use of the installment method will also be discussed, including contingent payments, depreciation recapture, sales between related parties, among others, as well as electing out of the installment method. The webinar will provide an overview of installment sales, the benefits, risks and alternatives to the installment method and how sellers should report installment sales for federal tax purposes.

Description

An installment sale under Section 453 of the Internal Revenue Code involves the disposition of property (real or personal) where at least one payment from the disposition is received by the seller after the tax year in which the disposition occurs. An installment sale requires the seller to use the installment method under Section 453 to report the gain from the sale of property unless the seller elects out of the installment method.

Sellers contemplating an installment sale should consider the installment method to report the proceeds from a sale of property as the installment method typically provides favorable tax treatment as the seller only pays tax on the profits from an installment sale as payments are received rather than the entire tax due in the year of the sale; essentially deferring the tax! When contemplating using the installment method, sellers should also be aware of the restrictions and potential pitfalls in order to avoid having to pay the total tax due in the year of the installment sale.

Listen as our panel of tax experts explains the benefits and caveats of installment sales reporting, including who is required to use this method, who is precluded from deferring gains, how recapture is taxed, and tips for dealing with delayed reporting of gains under Section 453.

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Outline

  1. Use of the installment method: an overview
  2. Calculation of taxes on installment payments
  3. Electing out of the installment method
  4. Contingent payments in installment sales
  5. Installment sales between related parties
  6. Property ineligible for installment sale reporting
  7. Depreciation recapture issues
  8. Self-Cancelling Installment Notes (SCINs)
  9. Structured installment sales transactions
  10. Filling out Federal Form 6252 – Installment Sale Income

Benefits

The panel will discuss these and other critical issues:

  • Who is allowed to use the installment method and when?
  • Are there transactions ineligible for reporting gain on the installment method?
  • Is there a way to mitigate the recognition of gain for depreciation recapture on installment sales?
  • What are the tax rules for contingent payment sales and how do they apply?
  • What are the related party considerations in installment sales?
  • What is the interest charge for installment sale obligations over $5,000,000?

Faculty

Bridgers, Griffin
Griffin H. Bridgers

Attorney
Hutchins & Associates

Mr. Bridgers' practice encompasses all areas of private wealth and family business. In addition to estate...  |  Read More

Escatel, Raul
Raul E. Escatel

Senior Partner
Ascendant Law Group

Mr. Escatel brings extensive experience and close personal attention to the representation of businesses and...  |  Read More

Lee, Alexander
Alexander D. Lee

Managing Partner
Ascendant Law Group

Mr. Lee has a multistate practice that focuses on tax, trust and estates. He advises clients on domestic and...  |  Read More

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