If an Installment Sale Contract Does Not Charge Interest on the Sale

question 24

True/False

If an installment sale contract does not charge interest on the sale of a capital asset, the IRS will impute interest and thereby increase the taxpayer's capital gain and interest income.

---

Definitions:

Raw Materials

Basic materials from which products are made, often extracted from the earth and unprocessed or minimally processed before use.

Inputs

Resources, energy, or information fed into a system or process to achieve output or results, crucial for the functioning of various systems.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Retained Earnings

The portion of net income left over for the company after it has paid out dividends to its shareholders.