Earlier, the Saudi Ministry of Commerce and Investment and SAMA were given the green light to put in place regulatory arrangements on installment sales
The IRS determined that Topsnik was not a German resident in 2010 and was liable for an income tax deficiency for 2010 attributable to the gain on his installment sale
The installment sale
technique may create several adverse estate tax consequences; for example, the deferral allowance under IRC section 6166 may become unavailable.
This is where an installment sale
could fend off these additional taxes by spreading the income over multiple years.
A taxpayer does not need to elect installment sale
To analyze the application of the installment sale
method to this transaction, the first step is to calculate the percentage of your gross selling price taken up by your selling expenses.
(3q) In the case of an installment sale
of IRC Section 1250 property (i.e., generally, most real estate subject to the allowance for depreciation under IRC Section 167, (4q) regulations state that unrecaptured IRC Section 1250 gain (which is generally taxed at a maximum marginal rate of 25%--see Q 7524) must be taken into account before any adjusted net capital gain (taxed at a maximum of 15%/0%--see Q 7524).
Think of this technique as an installment sale
for a period of life expectancy.
Exhibit 1 shows that after-tax returns from electing out of the installment sale
method decrease as the length of the note increases from two to 10 years.
Before agreeing to an installment sale
, the investor should (1) compare the alternatives (i.e.
The installment sale
is a device for spreading out the taxable gain and thereby deferring the income tax on gain from the sale of property.
The maximum tax rate on net capital gain (i.e., net long-term capital gain reduced by any net short-term capital loss) has been reduced from 20% to 15% (and from 10% to 5% for taxpayers in the 10% and 15% tax rate brackets) for property sold or otherwise disposed of after May 5, 2003 [and installment sale
payments received after that date].