All of the Following Taxpayers Can Use the Installment Method

question 15

Multiple Choice

All of the following taxpayers can use the installment method to report gains from the sale of assets except:

• A)A taxpayer who sells a parcel of land used in his trade or business.
• B)A taxpayer who sells land he inherited from his father five years ago.
• C)A taxpayer who sells a large piece of manufacturing equipment on which he took a Section 179 deduction for the total cost two years ago when purchased.
• D)A taxpayer who sells a building used in his trade or business for five years that was depreciated using straight-line depreciation.

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Definitions:

Normal Profits

The minimum level of profit needed for a company to remain competitive in the market, often considered as the break-even point.

Pure Competition

A market structure characterized by a large number of small firms, homogeneous products, and ease of entry and exit, leading to price taking behavior.

Production Costs

The total expense incurred in manufacturing a product or providing a service, including materials, labor, and overhead costs.

Pure Competition

A market structure characterized by a large number of small firms producing identical products with no barriers to entry or exit.