This section lets certain sellers report income from installment sales as payments are received, and sets special rules for casual sales, changes from accrual to installment reporting, and installment obligations.
§94. Installment basis A. Regular sales of personalty. Under regulations prescribed by the collector, a person who regularly sells or otherwise disposes of personal property on the installment plan may return as income therefrom in any taxable year that proportion of the installment payments actually received in that year which the gross profit realized or to be realized when payment is completed, bears to the total contract price. B. Sales of realty and casual sales of personalty. In the case of a casual sale or other casual disposition of personal property, other than property of a kind which would probably be included in the inventory of the taxpayer if on hand at the close of the taxable year, for a price exceeding one thousand dollars ($1,000.00), or of a sale or other disposition of real property, if in either case the initial payments do not exceed thirty per centum (30%) of the selling price, the income may, under regulations prescribed by the collector, be returned on the basis and in the manner above prescribed in this Section. As used in this Section, the term "initial payment" means the payments received in cash or property other than evidences of indebtedness of the purchaser during the taxable period in which the sale or other disposition is made. C. Change from accrual to installment basis. If a taxpayer entitled to the benefits of Sub-section A of this Section elects for any taxable year to report his net income on the installment basis, then in computing his income for the year of change or any subsequent year, amounts actually received during any such year on account of sales or other dispositions of property made in any prior year shall not be excluded. D. Gain or loss upon disposition of installment obligations. If an installment obligation is satisfied at other than its face value or distributed, transmitted, sold, or otherwise disposed of, gain or loss shall result to the extent of the difference between the basis of the obligation and (1) In the case of satisfaction at other than face value or a sale or exchange, the amount realized, or (2) In case of a distribution, transmission, or disposition otherwise than by sale or exchange, the fair market value of the obligation at the time of such distribution, transmission, or disposition. The basis of the obligation shall be the excess of the face value of the obligation over an amount equal to the income which would be returnable were the obligations satisfied in full. This Sub-section shall not apply to the transmission at death of installment obligations if there is filed with the collector, at such time as he may by regulations prescribe, a bond in such amount and with such securities as he may deem necessary, conditioned upon the return as income, by the person receiving any payment of such obligations, of the same proportion of such payment as would be returnable as income by the decedent if he had lived and had received such payment.