An installment sale under Section 453 involves a disposition of property where at least one payment is received by the seller after the tax year in which the disposition occurs. The installment method of reporting is mandatory in the case of an installment sale. However, a taxpayer may elect out of the installment method. Taxpayers contemplating a sale of property at a gain should consider the installment method of reporting because it typically provides favorable tax treatment in that tax is paid as payments are received rather than entirely in the year of disposition.
US Tax Marketing Leader, PwC US