All of the following taxpayers can use the installment method to report gains from the sale of assets except:
A)A taxpayer who sells a parcel of land used in his trade or business.
B)A taxpayer who sells land he inherited from his father five years ago.
C)A taxpayer who sells a large piece of manufacturing equipment on which he took a Section 179 deduction for the total cost two years ago when purchased.
D)A taxpayer who sells a building used in his trade or business for five years that was depreciated using straight-line depreciation.

Question

Quizplus · Accepted Answer

Taxpayers who sell assets used in their trade or business, inherited assets, or assets depreciated using straight-line depreciation can use the installment method to report gains over several years. However, a taxpayer who took a Section 179 deduction for the total cost of an asset in the year of purchase is not eligible for the installment method. Therefore, choice C is incorrect.

All of the Following Taxpayers Can Use the Installment Method