Which of the following statements regarding the installment sale of entire busin

Question

Which of the following statements regarding the installment sale of entire business is FALSE? The sales price and expense of sale of an entire business must be allocated because: 1--Real adn personal property can be reported on the installment method but inventory cannot. 2--Any deprecaiton recapture income from the sale of depreciable property cannot be reported on the installment method. 3--Assets sold at a loss cannot be reported using the installment method. 4--Intangible property cannot be reported using the installment method.

Explanation / Answer

Ans 2--Any deprecation recapture income from the sale of depreciable property cannot be reported on the installment method.

Any depreciation recapture income in the year of sale should be reported, whether or not an installment payment was received that year or not.

All other statements are true regarding installment method when selling property.

a) Real and Personal property can be reported in installment method but inventory cannot.

b) Installment method cannot be used if a loss was taken on the sale.

c) Intangible Property cannot be reported using the installment method.

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