Installment Sales: Definition, Tax Implications & Examples

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

An installment sale is a way for a business to defer _____.

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1. Installment sales are most common in the sale of which of the following?

2. Which of the following entities benefits most from an installment sale?

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About This Quiz & Worksheet

This quiz and its attached worksheet will quickly measure your knowledge of installment sales. You will be asked to explain what this type of sale is and why it is used.

Quiz & Worksheet Goals

Answer the questions on this quiz to see if you understand:

  • The most common purchase made using this method
  • Who most benefits from an installment sale
  • The purpose of an installment sale

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the material, such as how the IRS regards income from an installment sale
  • Critical thinking - apply relevant concepts to examine information about why a company or entity would want to use an installment sale method in a different light
  • Information recall - access the knowledge you've gained regarding what portion of the whole price a business pays taxes on in an installment sale

Additional Learning

If you are still curious about this type of business transaction, review the lesson titled Installment Sales: Definition, Tax Implications & Examples. It will explain:

  • The IRS document that concerns installment sales
  • Alternatives to an installment sale
  • Reporting requirements for an installment sale
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