INSTALLMENT REPORTING Flashcards
1
Q
- An individual making a casual sales or disposition of property involving deferred payment, not in the course of trade or business, must report his income
a. Under cash method
b. Under accrual method
c. Under installment method
d. Any of the above
A
D
2
Q
- Gross income is reported partially in each taxable year in proportion to collections made in such period as it bears to the total contract price refer to
a. Crop year basis method
b. Installment sales method
c. Percentage of completion method
d. Accrual method
A
B
3
Q
- On capital gains tax on real property, which of the following statements is not correct?
a. The installment payment of the tax should be made within 30 days from receipt of each installment payment on the selling price
b. The term “initial payment” is synonymous to “downpayment”
c. The tax should be paid, if in one lump sum within 30 days from the date of the sale
d. The tax may be paid in installment if the initial payments do not exceed 25% of the selling price
A
B
4
Q
- The taxpayer is not a dealer of personal property regularly selling on installment. Installment method
of reporting income is available to him on a sale of property if the initial payments on the sale
a. Exceed 25% of the selling price
b. Do not exceed 25% of the selling price
c. Do not exceed 25% of the contract price
d. Regardless of the ratio of initial payments to the selling price
A
B
5
Q
- All of the following, except one, are not taken into account in determining the correct amount of initial
payments
a. Commission
b. Other selling expenses
c. Installment payments in the year of sale
d. Gross profit
A
C
6
Q
- Which statements is correct?
a. In installment method, if the seller of the property is an individual the holding period of the
capital asset is still applied even if the property is a real property
b. The installment method of reporting income is allowed if the initial payment does not exceed
25% of the contract price
c. If the amount paid at the time of purchase does not exceed 25% of the selling price, the
installment method of reporting income may be applied even if the entire price is paid in the
year of sale
d. Reporting of income under the installment method is based on the percentage of collection of
the selling price
A
D
7
Q
- Which of the following statements is false in installment method of reporting income
a. The gain on sale is computed by subtracting the book value from the selling price of the property if the property is a capital asset
b. If the property sold is not a subject of mortgage, the selling price is equivalent to the amount
of contract price
c. An installment payment of tax may also be made even if the asset is subject to capital gains tax
d. The initial payment includes the excess of mortgage over cost, if any
A
A
8
Q
- The following statements about installment method of reporting income are incorrect. Which is the
exception?
a. If a mortgage has been assumed by the buyer but the acquisition cost of the property is more
than the mortgage, the amount of selling price is equal to the contract price
b. If the buyer assumes an unpaid mortgage on the property sold, the contract price is less than
the selling price
c. If the initial payment exceeds 25% of the selling price, the sale shall be reported under cash
method of reporting income
d. The excess of mortgage over cost is added to the initial payment is computing the amount of
cash paid as down payment
A
B
9
Q
- Deferred payment method of reporting income on an installment sale is available to a taxpayer if, there being a requirement of the law on the ratio of initial payments to the selling price, the initial payments on the sale
a. Exceed 25% of the selling price
b. Do not exceed 25% of the selling price
c. Do not exceed 25% of the contract price
d. Regardless of the ratio of initial payments to the selling price
A
A
