The difference is OID or unstated interest under Secs.
The adjusted issue price of a qualifying installment note with unstated interest subject to Sec.
Accrual-method taxpayers who sell property in exchange for an installment obligation must treat as part of the amount realized the gross value of all payments to be received on the obligation (less stated and unstated interest
, as well as original issue discount, according to regulations section 15a.
483 and 1271-1275 (and the underlying regulations), to determine if the installment obligation has either unstated interest
or original issue discount.
Under the new law, accrual-method taxpayers who sell property for an installment obligation must treat as part of the amount realized the gross value of all payments to be received on the obligation (excluding stated and unstated interest
, as well as original issue discount) (Regs.
The Gibbs court answered this argument by pointing out that unstated interest is not carved out in other payment situations involving gain exclusions (such as Secs.
The unstated interest in such a situation could not be carved out and deducted after the fact.
Before the Deficit Reduction Act of 1984 (DRA), a deferred-payment sale of property exempt from the original issue discount (OID) rules generally was subject to the unstated interest
rules of Sec.
However, if the purchaser pays for the intangible assets over a period of years and those payments contain unstated interest
, a portion of the purchase price will be treated as interest under Sec.