Closed Transaction Reporting:
a.    Code: 1001(a) – (d)
b.    Reg: 1.1001(a)
2.    as a general rule, GI includes all income derived from any source, including gains from dealings in property
a.    under 1001(c), unless a non-recognition provision applies, the entire gain or loss realized on the sale or exchange of property is to be recognized
b.    if all gain realized in a deferred payment sale is recognized in the year of sale, the transaction is referred to as a “closed transaction” b/c the tax consequences are established at the time of the sale; in this case.  In this, a taxpayer generally recognizes gain to the extent the amount realized exceeds the A/B of the property sold
c.    1001(b): for the cash accounting method, items are included in GI when cash or its equivalent, services, or property is actually or constructively received.  If a promissory note is considered “property received” then the taxpayer must determine the FMV of the note and include that value in the amount realized.  However, using this method may create a tax liability which exceeds the amount of cash on hand at the time.
3.    Warren Jones v. Commissioner (1975) [11th Cir]
a.    this case pisses all over the tax courts interpretation of the cash equivalency doctrine,
b.    the court said that the down payment was includable in GI; and the FMV of the note today was also includable;  the note was worth 133K and the FMV of the note was 117K subject to a 40K encumbrance (you had to put of 40K to ensure the note), t/f the note had a FMV 76K, which had to be included in GI
4.    15a.453-1(d)(2)(ii),(iii):  “receipt of an installment obligation shall be treated as a receipt of property, in an amount equal to the FMV of the installment obligation, whether or not such obligation is the equivalent of cash”—this kills cash equivalency!
a.    this was admittedly harsh, but the court said that is what we have 453 (installments) for!