- 14 - 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).Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011