Paul D. and Joyce E. Krause - Page 3

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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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