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the gains realized from their real estate sales. Respondent,
however, determined in the notice of deficiency that petitioners
were not entitled to a section 179 expense deduction and,
therefore, disallowed that expense. Petitioners conceded that
adjustment and now seek the benefit of section 453 to have their
real estate gains taxed under the installment method. Respondent
challenges their right to do so.
Section 453 provides that income from an installment sale is
accounted for under the installment method. See Bolton v.
Commissioner, 92 T.C. 303, 305 (1989). An installment sale is
defined as a disposition of property where at least one payment
is to be received after the close of the taxable year in which
the disposition occurs. See sec. 453(b)(1). Income from an
installment sale is automatically to be taken into account as
installment income under section 453 unless the taxpayer elects
not to have the method apply. See sec. 453(a), (d); Bolton v.
Commissioner, supra at 306. Generally, an election by the
taxpayer 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.
See Bolton v. Commissioner, supra; sec. 15A.453-1T(d)(3),
Temporary Income Tax Regs., 46 Fed. Reg. 10718 (Feb. 4, 1981).
Specifically, a taxpayer who reports an amount realized which
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