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 Sale: Process, Electing Out and Contingent Payments, Treatment of Escrowed Consideration, Impact, Alternatives
Famous quotes containing the words installment and/or sale:
“Civil Rights: What black folks are given in the U.S. on the installment plan, as in civil-rights bills. Not to be confused with human rights, which are the dignity, stature, humanity, respect, and freedom belonging to all people by right of their birth.”
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Surely it is for sale somewhere,
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It might be in a store somewhere beside a ladys scarf.”
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