Which of the Following May Qualify as an Installment Sale

question 11

Multiple Choice

Which of the following may qualify as an installment sale?

• A)Sale of inventory at a gain.
• B)Sale of securities.
• C)Sale of asset used in a business at a gain.
• D)Land sold at a loss.
• E)All of these are truE.Assets used in a business qualify for installment sale treatment,although depreciation recapture is ineligible.

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Definitions:

Simple Interest

The calculation of interest paid only on the original amount of money invested, not on the interest it has already earned.

Compounded Annually

Describes the process by which an investment's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

Interest Rate

Interest rate is the percentage of principal charged by the lender for the use of its money or the return earned on deposited funds.

Future Value

The value of an investment at a specified date in the future that is equivalent in value to a specified sum today, after being compounded at a given interest rate.