Installment Sales

Installment Sales

Learn about the tax consequences if the purchase price for property is paid over time, not all at once.


In this lesson, we'll survey the installment method of reporting gain on property sales.

Introduction to the Installment Method

We know that a taxpayer's accounting method, such as the cash or accrual method, generally determines the taxable year in which a taxpayer recognizes gain or loss. However, the installment method is one major exception to this rule.

Congress devised the installment method to alleviate hardship on property sellers who accept some or all of the purchase price in...