Question

n which of the following scenarios would the taxpayer NOT be likely to benefit from an installment sale? A taxpayer who sold:

Investment-use land for a gain.

Their main home at a gain that exceeds their allowable exclusion.

A business-use machine at a gain that is more than the depreciation allowed or allowable.

A business-use car at a gain that is less than the amount of depreciation allowed.

Answer 1

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In which of the following scenarios would the taxpayer NOT be likely to benefit from an installment sale? A taxpayer who sold:

A business use machine at a gain that is more than the depreciation allowed or allowable

Because, the main benefit of the strategy of instalment sale is spread of the capital gains income over time. The greater of the depreciation allowable or allowed is often the amount to use in knowing the part of gain to report as ordinary income. Even when taxpayer has an instalment sale, he must pay the entire tax the year taxpayer would sell the property