John T. Barrett, Jr. and Jane W. A. Barrett - Page 13

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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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