Asked by mirna jaime on May 02, 2024
Verified
The installment method cannot be used to report gain from the sale of stock or securities that are traded on an established securities market.
Installment Method
A tax method that allows income from sales to be reported for tax purposes when the payment is received, rather than at the point of sale.
Established Securities Market
A recognized exchange or market where securities, stocks, bonds, and other financial instruments are traded among investors.
- Understand the restrictions and criteria for applying the installment approach to acknowledge profits.
Verified Answer
DS
Daniel StubyMay 08, 2024
Final Answer :
True
Explanation :
The installment method is not applicable to the sale of stock or securities that are traded on an established securities market. This is because the market price is readily available, and there is no uncertainty regarding the ultimate collection of the sale price. The installment method is typically used for sales of property where there is uncertainty regarding the collectability of the sale price, and the gain can be reported over time as payments are received.
Learning Objectives
- Understand the restrictions and criteria for applying the installment approach to acknowledge profits.