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Use of installment method.

Notice 2001-22 addresses the application of the Installment Tax Correction Act of 2000 (ITCA) to accrualmethod taxpayers that disposed of property in an installment sale after Dec. 16, 1999.

The ITCA repealed Sec. 453(a)(2), which provided that a taxpayer could not use the installment method if income generated from an installment sale would have been reported under the accrual method were it not for Sec. 453(a).

Taxpayers were deemed to have elected out of the installment method if, for the tax year of the installment sale, they filed a return reporting an amount realized equal to the selling price. Taxpayers can now revoke an effective election out of the installment method, provided that they file amended returns for the year in which the installment sale occurred and for any subsequent year in which they should have reported installment income.
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Author:Laffie, Lesli S.
Publication:The Tax Adviser
Geographic Code:1USA
Date:Apr 1, 2001
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