C corp is selling assets on installment agreement

[schirallicpa]

I believe the C Corp will be ineligible for installment reporting if the corp is on an accrual basis.

So - the corp will take the hit, and then the owner/stockholder will take the hit.  (no - not my regular client.  Another tax preparer is asking for input as to how to handle.)

Does the corp have to stay open to continue to collect the payments?  Can the payment agreement be transferred?  Or does this trigger another event somehow......? 

[Lee B]

Any depreciation gets recaptured and taxed in year 1 so that could be a problem when the resulting tax is greater than the first year proceeds.

Don't think it makes any difference whether the corporation is accrual or cash

The corporation can terminate and distribute the installment sales contract to the stockholders.

This is a test of my memory.

Did I pass or fail

[DANRVAN]

13 hours ago, schirallicpa said:

I believe the C Corp will be ineligible for installment reporting if the corp is on an accrual basis.

That was the rule 20+ years ago.  It was repealed and struck from section 453.

 

13 hours ago, schirallicpa said:

Does the corp have to stay open to continue to collect the payments?  Can the payment agreement be transferred?  Or does this trigger another event somehow......? 

In order for shareholder to receive installment treatment, the corp must adopt a plan of complete liquidation.  The sale of the assets and distribution of the installment agreement to the shareholder (in exchange for his/her stock) must occur within 12 months from the date the plan of liquidation is adopted.  See sec 453 for details.

[DANRVAN]

12 hours ago, cbslee said:

Did I pass or fail

Top of the class .