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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Publication 537 states in part that that Section 1274 does

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Publication 537 states in part that that Section 1274 does not apply to transactions arising from:
• A sale or exchange for which the total pay- ments are $250,000 or less.
• The sale or exchange of an individual’s main home.

Does this mean that if my installment sale met the above requirements, and no interest rate was stated, I would not be required to treat any of the sale price as interest?

Hi and welcome to JustAnswer:


Your interpretation is correct if your transaction meets either of the two exceptions quoted. Thus the full selling price would be included when determining the gain and all payments would be included in the installment gain computation.


MequonCPA and other Tax Specialists are ready to help you
Customer: replied 6 years ago.
How would this look from the buyers' standpoint? Assuming they held the property as a rental would the entire sale price be capitalized or could they impute a fair market rate of interest and deduct that amount from income?
The imputed interest rate rules are the same on the buyer's or seller's side. If imputed interest is not required of the seller, imputed interest is not computed by the buyer.