1. 453B: if you dispose of your note early, the G is going to tax you on the note in line with the acceleration of your receipt
2. upon the disposition of an installment obligation, gain or loss is recognized to the extent of the difference b/w the B in the obligation and either:
1. the amount realized in the case of satisfaction at other than face value or a sale or exchange, or
2. the FMV of the obligation at the time of any other distribution, transmission, or disposition
b. Under 453B, a taxpayer’s B in an installment note is the face value of the note minus the amount that would be taxable if the note was satisfied in full.
i. See page 376 for an example
3. United Surgical Steel Co. v Commissioner (1970)
a. did petitioner “dispose of” installment obligations during its taxable year?
1. the respondent “pledged” his installment sale as collateral as a loan, and states in opposition to the G assertation that a “pledge” does not fall into 453B’s “otherwise disposed of” category—the court says that this is a loan in form as well as substance and is not a sale of the collateral and, t/f is not governed by the provisions in 453B
ii. the court says that this is a loan, however, Ascher says that it is closer than that;
iii. Congress comes back and gets §453A to get you when certain transactions are of a certain size
We have located some similar legal questions and legal question categories. Check out these challenging questions that askquestions about Property Law and are similar to Write a Note on Disposition of Installment Obligations.. Also, we have included a list of some of our more popular legal question categories. These categories are based on what everyone is asking and answering.
What's Your Answer to "Write a Note on Disposition of Installment Obligations."