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demand or is issued by, inter alia, a corporation and is readily
tradable, sec. 453(f)(4),5 and the note was neither payable on
demand nor readily tradable. Petitioners argue that the only
“payment” received with respect to the shares was the cash that
they received from Drexel during 1989. Accordingly, petitioners
argue that they were not required to elect out6 of the
installment method in order to preclude its application to
petitioner’s disposition of the shares.
Although petitioners are correct in their contention that
the note was not a “payment” within the meaning of the relevant
sections because it was neither payable on demand nor readily
tradable, petitioners simply misinterpret the Code when they
conclude that the transaction was not an installment sale because
the note was not a “payment”. By excluding the receipt of a
nondemand, nonreadily tradable evidence of indebtedness from the
definition of “payment”, the installment sale provisions treat
5
Sec. 453(f)(4) states:
(4) Purchaser evidences of indebtedness payable on
demand or readily tradable.--Receipt of a bond or other
evidence of indebtedness which--
(A) is payable on demand, or
(B) is issued by a corporation or a
government or political subdivision thereof and is
readily tradable,
shall be treated as receipt of payment.
6
Petitioners do not argue that they elected out of the
installment method as provided by sec. 453(d).
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