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connection with the sale and not filing a Form 6252 [Installment
Sale Income] with their original return.”
Section 453(d) permits a taxpayer who has made an
installment sale to elect out of the installment method of
accounting, which, absent the election, would apply to the sale
pursuant to section 453(a). Section 15A.453-1(d)(3)(i),
Temporary Income Tax Regs., 46 Fed. Reg. 10718 (Feb. 4, 1981),
provides, in pertinent part:
A taxpayer who reports an amount realized equal to the
selling price including the full face amount of any
installment obligation on the tax return filed for the
taxable year in which the installment sale occurs will
be considered to have made an effective election [out
of the installment method] * * *
On their 2000 return, Schedule D, petitioners reported two
items of long-term capital gain: $631,590 described as
“partnership interest” and $16,790 described as “note payments”.
Both items were reported as gross sale price offset by zero
basis. The $631,590 approximates the $661,774.01 cash payment
from Surgicoe to Ms. Moore at the closing of the sale of her LLC
membership interest to Surgicoe that was specified in a
“Disbursement Authorization” dated July 29, 2000, and signed by
the parties to the Surgicoe purchase agreement.17 The $16,790
equals five payments of $3,358.03, the amount of the monthly
17 There is no explanation of the discrepancy between the
amount of the cash payment provided in the disbursement
authorization and the amount petitioners reported.
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