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Generally, the election not to report a disposition of property
on the installment method is made by the due date of the
taxpayer’s return for the year in which the disposition occurs
and in the manner prescribed by the appropriate tax forms for
that return. Sec. 15A.453-1(d)(3), Temporary Income Tax Regs.,
46 Fed. Reg. 10718 (Feb. 4, 1981); see also Bolton v.
Commissioner, 92 T.C. 303, 305-306 (1989).
Respondent contends that petitioner’s disposition of the
shares falls squarely within the definition of an installment
sale, and, therefore, petitioners must report gain pursuant to
the installment method on the disposition of the shares for the
year of the sale, to wit, 1989. Petitioners contend that the
sale was not an installment sale because no payment was to be
received after the close of the year in which the disposition of
the shares occurred, as required by section 453(b)(1).
Petitioners contend that the note was not a “payment” as that
term is used in section 453(b)(1), because section 453(f)(3)4
excludes from the definition of “payment” the receipt of an
evidence of indebtedness of the person acquiring the property
unless the purchaser’s evidence of indebtedness is payable on
4
Sec. 453(f)(3) states:
(3) Payment.--Except as provided in paragraph (4),
the term “payment” does not include the receipt of
evidences of indebtedness of the person acquiring the
property (whether or not payment of such indebtedness
is guaranteed by another person).
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