Installment Reporting:
a.    Code: 453(a)-(g), (i); 453B(a), (b); 1001(c), (d); 1041(a)
b.    Reg: 15A.453-1(a), (b)(1) to (3)(i), (c)(1) to (2)(i), (3), (4), (d)(1) to (2), (e)(1)
2.    the most widely used deferred payment reporting method is 453, installment reporting.
3.    instead of taking basis all at once as is done in closed transaction, installment method does it on a pro rata basis
4.    installment sale reporting is designed to:
a.    to relieve taxpayers form having to pay an income tax in the year of sale based on anticipated profits when they have, in fact, received only a portion of the sales price &
b.    to avoid the difficult task of appraising the value of the purchaser’s promissory obligations in uncertain markets
5.    453 automatically applies unless the taxpayer elects out
6.    procedure:
a.    as payments are collected, the seller treats a portion of each payment as a return of B and a portion as income.
7.    the mechanics of 453(c), which divides payments b/w income and return of B, require the identification of three items:
1.    payments received in a taxable year;
2.    gross profit
3.    total contract price
8.    Formula:
a.    For each taxable year, taxable gain equals the total payments received in that year, multiplied by the gross profit percentage (that is, the gross profit divided by the contract price).  Gross profit generally equals the selling price minus the A/B of the property sold.  T/f income to be recognized form an installment sale is computed each year as follows:
i.    income recognized = payment x (gross profit/total contract price)*
1.    *(gross profit/total contract price) = Gross profit percentage

9.    453A(a)(1): Congress thought that too much of a good thing was bad, so in certain cases if the face amount of all installment obligations exceeds 5,000,000 bones, an interest charge is imposed on the differed tax liability.