26 U.S.C. § 453A
In the case of an installment obligation to which this section applies-
This section shall apply to any obligation which arises from the disposition of any property under the installment method, but only if the sales price of such property exceeds $150,000.
For purposes of subsection (a)(1), this section shall apply to an obligation described in paragraph (1) arising during a taxable year only if-
Except as provided in regulations, all persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as one person for purposes of this paragraph and subsection (c)(4).
An installment obligation shall not be treated as described in paragraph (1) if it arises from the disposition-
An installment obligation shall not be treated as described in paragraph (1) if it arises from a disposition described in section 453(l)(2)(B), but the provisions of section 453(l)(3) (relating to interest payments on timeshares and residential lots) shall apply to such obligation.
For purposes of paragraph (1), all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as 1 sale or exchange.
If an obligation to which this section applies is outstanding as of the close of any taxable year, the tax imposed by this chapter for such taxable year shall be increased by the amount of interest determined in the manner provided under paragraph (2).
For purposes of paragraph (1), the interest for any taxable year shall be an amount equal to the product of-
For purposes of this section, the term "deferred tax liability" means, with respect to any taxable year, the product of-
For purposes of applying the preceding sentence with respect to so much of the gain which, when recognized, will be treated as long-term capital gain, the maximum rate on net capital gain under section 1(h) shall be taken into account.
For purposes of this subsection, the term "applicable percentage" means, with respect to obligations arising in any taxable year, the percentage determined by dividing-
Any amount payable under this subsection shall be taken into account in computing the amount of any deduction allowable to the taxpayer for interest paid or accrued during the taxable year.
The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this subsection including regulations providing for the application of this subsection in the case of contingent payments, short taxable years, and pass-thru entities.
For purposes of section 453, if any indebtedness (hereinafter in this subsection referred to as "secured indebtedness") is secured by an installment obligation to which this section applies, the net proceeds of the secured indebtedness shall be treated as a payment received on such installment obligation as of the later of-
The amount treated as received under paragraph (1) by reason of any secured indebtedness shall not exceed the excess (if any) of-
If any amount is treated as received under paragraph (1) with respect to any installment obligation, subsequent payments received on such obligation shall not be taken into account for purposes of section 453 to the extent that the aggregate of such subsequent payments does not exceed the aggregate amount treated as received under paragraph (1).
For purposes of this subsection indebtedness is secured by an installment obligation to the extent that payment of principal or interest on such indebtedness is directly secured (under the terms of the indebtedness or any underlying arrangements) by any interest in such installment obligation. A payment shall be treated as directly secured by an interest in an installment obligation to the extent an arrangement allows the taxpayer to satisfy all or a portion of the indebtedness with the installment obligation.
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations-
26 U.S.C. § 453A
EDITORIAL NOTES
PRIOR PROVISIONSProvisions similar to those comprising this section were contained in former section 453 of this title.
AMENDMENTS2017-Subsec. (c)(3). Pub. L. 115-97 struck out "or 1201 (whichever is appropriate)" after "1(h)" in concluding provisions. 1999-Subsec. (d)(4). Pub. L. 106-170 inserted at end "A payment shall be treated as directly secured by an interest in an installment obligation to the extent an arrangement allows the taxpayer to satisfy all or a portion of the indebtedness with the installment obligation." 1993-Subsec. (c)(3). Pub. L. 103-66 inserted at end "For purposes of applying the preceding sentence with respect to so much of the gain which, when recognized, will be treated as long-term capital gain, the maximum rate on net capital gain under section 1(h) or 1201 (whichever is appropriate) shall be taken into account."1989-Subsec. (b)(2)(B). Pub. L. 101-239, §7821(a)(1), substituted "such obligations held by the taxpayer" for "obligations of the taxpayer described in paragraph (1)".Subsec. (b)(3). Pub. L. 101-239, §7815(g), substituted "Exception for personal use and farm property" for "Exception for farm property" in heading and amended text generally. Prior to amendment, text read as follows: "An installment obligation shall not be treated as described in paragraph (1) if it arises from the disposition of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5)." Pub. L. 101-239, §7812(c)(2), substituted "(5))." for "(5)."Subsec. (c)(5), (6). Pub. L. 101-239, §7821(a)(4)(B), added par. (5) and redesignated former par. (5) as (6).Subsec. (d)(1)(B). Pub. L. 101-239, §7821(a)(3), substituted "the time the proceeds" for "the proceeds". Subsec. (d)(2)(B). Pub. L. 101-239, §7821(a)(2), substituted "the later of the times referred to in subparagraph (A) or (B) of paragraph (1)" for "such secured indebtedness was incurred". 1988-Pub. L. 100-647, §5076(b)(1), struck out "of real property" after "rules for nondealers" in section catchline. Subsec. (b)(1). Pub. L. 100-647, §5076(a), amended par. (1) generally. Prior to amendment, par. (1) read as follows: "This section shall apply to any obligation which arises from the disposition of real property under the installment method which is property used in the taxpayer's trade or business or property held for the production of rental income, but only if the sales price of such property exceeds $150,000."Subsec. (b)(2). Pub. L. 100-647, §2004(d)(7), inserted "and subsection (c)(4)" after "of this paragraph" in last sentence.Subsec. (b)(3). Pub. L. 100-647, §2004(d)(8), substituted "farm property" for "personal use and farm property" in heading and amended text generally. Prior to amendment, text read as follows: "An installment obligation shall not be treated as described in paragraph (1) if it arises from the disposition-"(A) by an individual of personal use property (within the meaning of section 1275(b)(3)), or"(B) of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5))."Subsec. (c). Pub. L. 100-647, §1008(g)(2), substituted "453(k)" for "453(j)" in subsec. (c) as in effect on date before the date of enactment of Pub. L. 100-203 (Dec. 22, 1987).Subsec. (e). Pub. L. 100-647, §2004(d)(2), added subsec. (e).1987-Pub. L. 100-203 substituted "Special rules for nondealers of real property" for "Installment method for dealers in personal property" in section catchline and amended text generally, revising and restating as subsecs. (a) to (d) provisions of former subsecs. (a) to (c).1986-Subsec. (a)(2). Pub. L. 99-514, §812(b)(1), struck out last sentence which read as follows: "This paragraph shall not apply with respect to sales of personal property under a revolving credit type plan."Subsec. (c). Pub. L. 99-514, §812(b)(2), added subsec. (c).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115-97 applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Pub. L. 115-97, set out as a note under section 11 of this title.
EFFECTIVE DATE OF 1999 AMENDMENT Amendment by Pub. L. 106-170 applicable to sales or other dispositions occurring on or after Dec. 17, 1999, see section 536(c) of Pub. L. 106-170, set out as a note under section 453 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103-66 applicable to taxable years beginning after Dec. 31, 1992, see section 13201(c) of Pub. L. 103-66, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT Amendment by sections 7812(c)(2) and 7815(g) of Pub. L. 101-239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such amendment relates, see section 7817 of Pub. L. 101-239, set out as a note under section 1 of this title.Amendment by section 7821(a)(1)-(3), (4)(B) of Pub. L. 101-239 effective as if included in the provision of the Revenue Act of 1987, Pub. L. 100-203, title X, to which such amendment relates, see section 7823 of Pub. L. 101-239, set out as a note under section 26 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT Amendment by section 1008(g)(2) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title. Amendment by section 2004(d)(2), (7), (8) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Pub. L. 100-203, title X, to which such amendment relates, see section 2004(u) of Pub. L. 100-647, set out as a note under section 56 of this title.Pub. L. 100-647, title V, §5076(c), Nov. 10, 1988, 102 Stat. 3683, provided that: "(1) IN GENERAL.-Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to sales after December 31, 1988."(2) BINDING CONTRACT, ETC.-The amendments made by this section shall not apply to any sale on or before December 31, 1990, if-"(A) such sale is pursuant to a written binding contract in effect on October 21, 1988, and at all times thereafter before such sale,"(B) such sale is pursuant to a letter of intent in effect on October 21, 1988, or"(C) there is a board of directors or shareholder approval for such sale on or before October 21, 1988."
EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100-203 applicable to dispositions in taxable years beginning after Dec. 31, 1987, with special rules for non-dealers and coordination with Tax Reform Act of 1986, see section 10202(e)(1), (3), (5) of Pub. L. 100-203, set out as a note under section 453 of this title.
EFFECTIVE DATEFor effective date, see section 6(a)(4) of Pub. L. 96-471, set out as a note under section 453 of this title.
CERTAIN REPLEDGES PERMITTEDPub. L. 100-647, title VI, §6031, Nov. 10, 1988, 102 Stat. 3695, provided that:"(a) GENERAL RULE.-Section 453A(d) of the 1986 Code (relating to pledges, etc., of installment obligations) shall not apply to any pledge after December 17, 1987, of an installment obligation to secure any indebtedness if such indebtedness is incurred to refinance indebtedness which was outstanding on December 17, 1987, and which was secured on such date and all times thereafter before such refinancing by a pledge of such installment obligation."(b) LIMITATION.-Subsection (a) shall not apply to the extent that the principal amount of the indebtedness resulting from the refinancing exceeds the principal amount of the refinanced indebtedness immediately before the refinancing."(c) CERTAIN REFINANCINGS PERMITTED.-For purposes of subsection (a), if-"(1) a refinancing is attributable to the calling of indebtedness by the creditor, and"(2) such refinancing is not with the creditor under the refinanced indebtedness or a person related to such creditor, such refinancing shall, to the extent the refinanced indebtedness qualifies under subsections (a) and (b), be treated as a continuation of such refinanced indebtedness."
AMENDMENT BY PUB. L. 99-514 TREATED AS CHANGE IN METHOD OF ACCOUNTINGFor provisions requiring change in accounting method in the case of any taxpayer who made sales under revolving credit plan and was on installment method under this section for such taxpayer's last taxable year beginning before Jan. 1, 1987, see section 812(c)(2) of Pub. L. 99-514, set out as an Effective Date of 1986 Amendment note under section 453 of this title.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- shareholder
- The term "shareholder" includes a member in an association, joint-stock company, or insurance company.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- taxpayer
- The term "taxpayer" means any person subject to any internal revenue tax.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.
- transaction
- The term "transaction" includes a series of transactions.