- 14 -
a taxpayer disposes of property and is to receive one or more
payments in a later year, the taxpayer’s profit on the sale is to
be included in income as the payments are received.
For purposes of section 453, payments include amounts
actually or constructively received in the taxable year. See
sec. 15A.453-1(b)(3)(i), Temporary Income Tax Regs., 46 Fed. Reg.
48920 (Oct. 5, 1981). In the context of a deferred exchange
where cash or a cash equivalent provides security for the
transfer of replacement property and is held in an escrow account
or trust, the question arises whether, for purposes of applying
the installment sale rules of section 453, the taxpayer has
actually or constructively received property at the commencement
of the deferred exchange. To answer this question, the section
453 regulations cross-reference rules contained in section
1.1031(k)-1(j)(2), Income Tax Regs. See id. These section 1031
regulations generally provide that the determination of whether
the taxpayer has received payment for purposes of section 453
will be made without regard to the fact that the transferee’s
obligation to convey replacement property to the taxpayer is
secured by cash or cash equivalent, if the cash or cash
equivalent is held in a “qualified escrow account” or “qualified
trust” as defined in section 1.1031(k)-1(g)(3), Income Tax Regs.,
provided the taxpayer had a bona fide intent to enter into a
deferred exchange of like-kind property at the beginning of the
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011