Taxation-Accounting Methods--Forfeiture of Privilege of Electing Installment Basis

Authors

Daniel R. Elliott Jr., University of Michigan Law SchoolFollow

Abstract

During 1953, petitioner sold her farm and agreed to receive payment in yearly installments. Her 1953 income tax return, in which she elected to report the sale on the installment basis, was not filed until 1957. Respondent, the Commissioner of Internal Revenue, assessed a deficiency and included the entire gain from the transaction in petitioner's 1953 return. On the basis of previous Tax Court decisions, he contended that petitioner was not entitled to use the installment method because of her failure to file a timely return. Petitioner argued that neither the statute nor the regulations required a timely return as a prerequisite to electing. On petition to the Tax Court, held, for respondent, five judges dissenting. The privilege of electing the installment method for reporting gain from the disposition of property is forfeited unless an election is made in the year of the sale. Marion C' de Baca , 38 T.C. 609 (1962).