- 24 -
Consequently, unless a specific exception to the above general
rules will permit deferral, we are satisfied that GIA, as an
accrual method business, must recognize and report income
attributable to the contracts for deed in the years of their
respective executions.
The primary exception for income deferral is section 453,
which provides for the “installment method” to be used in
reporting an “installment sale”. Petitioners do not, however,
appear to argue that this statute is applicable. We also note
that a “dealer disposition”, including “Any disposition of real
property which is held by the taxpayer for sale to customers in
the ordinary course of the taxpayer’s trade or business”, is
excluded from the definition of an installment sale. Sec.
453(b)(2)(A), (l)(1)(B). The parties here have stipulated that
“GIA was in the business of selling, financing, and renting
residential real property.” Additionally, although a further
exception can permit use of the installment method for sales of
residential lots, see sec. 453(l)(2)(B), the record before us
fails to establish that petitioners could qualify under this
provision. The contracts indicate that the majority of the
properties were houses, not lots. Also, as to the contracts
which may have been for land alone, no evidence shows that the
remaining requirements for this election have been met. See sec.
453(l)(2)(B)(ii), (l)(3); Wang v. Commissioner, T.C. Memo. 1998-
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011