74TH CONGRESS . SESS. II. CH. 690 . JUNE 22, 1936. SEC. 44. INSTALLMENT BASIS. 166 7 Install ment b asis . (a) DEALERS IN PERSONAL PROPERTY . - Under regulations pre- Dealers in personal a property . scribed by the Commissioner with the approval of the Secretary, person who regularly sells or otherwise disposes of personal prop- erty on the installment plan may return as income therefrom in any taxable year that proportion of the installment payments actually received in that year which the gross profit realized or to be realized when payment is completed, bears to the total con- tract price . (b) SALES OF REALTY AND CASUAL SALES OF PERSONALTY.-In the case (1) of a casual sale or other casual disposition of personal p rope rty (other than property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year), for a price exceeding $1,000, or (2) of a sale or other disposition of real property, if in either case the initial payments do not exceed 30 per centum of the selling price (or, in case the sale or other disposition was in a taxable year beginning prior to January 1, 1934, the percentage of the selling price pre- scribed in the law applicable to such year), the income may, under regulations prescribed by the Commissioner with the approval of the Secretary, be returned on the basis and in the manner above prescribed in this section . As used in this section the term "initial payments" means the payments received in cash or property other than evidences of indebtedness of the purchaser during the taxable period in which the sale or other disposition is made . (C) CHAN GE FROM ACCRUAL TO INSTALLMENT BASIS.-If a taxpayer entitled to the benefits of subsection (a) elects for any taxable year to report his net income on the installment basis, then in computing his income for the year of change or any subsequent year, amounts actually received during any such year on account of sales or other dispositions of property made in any prior year shall not be excluded . (d) G AIN OR LASS UPON DISPOS ITION OF INSTALLMENT OBLIGA- TIONS.-If an installment obligation is satisfied at other than its face value or distributed, transmitted, sold or otherwise disposed of, gain or loss shall result to the extent o? the difference between the basis of the obligation and (1) in the case of satisfaction at other than face value or a sale or exchange-the amount realized, or (2) in case of a distribution, transmission, or disposition other- wise than by sale or exchange-the fair market value of the obliga- tion at the time of such distribution, transmission, or disposition . Any gain or loss so resulting shall be considered as resulting from the sale or exchange of the property in respect of which the install- ment obligation was received . The basis of the obligation shall be the excess of the face value of the obligation over an amount equal to the income which would be returnable were the obligation satis- fied in full . This subsection shall not apply to the transmission at death of installment obligations if there is filed with the Commis- sioner, at such time as he may by regulation prescribe, a bond in s uch amo unt and with such sureties as he may de em nece ssa ry, conditioned upon the return as income, by the person receiving any payment on such obligations, of the same proportion of such pay- ment as would be returnable as income by the decedent if he had lived and had received such payment . SEC. 45. ALLOCATION OF INCOME AND DEDUC TIONS . In any case of two or more organizations, trades, or businesses (whether or not incorporated, whether or not organized in the Un ited States , and wheth er or not a ffili ated) owned or c ontrol led di rectl y or i ndire ctly b y the same inter ests, the C ommis sioner is Sales of realty and ca sual sa les of per - sonalty. " Init ial pa ymen ts" defin ed . Co mputa tion on change to installment basis . Gain or loss upon disposition of install- ment obligations. Ba sis . Transmission at dea th of i nst all ment obligations . Allocation of income and deductions . Provisions if same in- terests con tr ol two or more businesses .
