installment buying and selling

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installment buying and selling,

buying and selling of goods on credit, with the stipulation that payments shall be made at specified intervals in set amounts. The goods may be used by the buyer before or upon first payment, but legally belong to the seller until the last payment has been made. If the buyer defaults, the seller reclaims the goods, and all former payments are forfeit. The layaway plan is another form of installment purchase, in which the merchandise is held by the retailer until the total selling price of the item has been paid. The installment buyer pays a higher price, the difference covering interest on unpaid balances, insurance, and financing charges. Originating in Paris in the early 19th cent., the practice of retailing goods on the installment plan was first used in the United States to sell sewing machines, pianos, and household furnishings to low-income consumers. After 1916, when manufacturers began to offer automobiles on the time-payment plan, installment selling rapidly came to include durable goods of every kind (household appliances, radios, oil burners), which otherwise would have been out of reach for the average income earner. Today, large merchandisers often issue their own credit cards, and banks frequently offer personal loans to consumers that may be repaid in installments. In recent years, installment buying has become common at all income levels, particularly in the financing of automobiles and real estate properties. The credit cardcredit card,
device used to obtain consumer credit at the time of purchasing an article or service. Credit cards may be issued by a business, such as a department store or an oil company, to make it easier for consumers to buy their products.
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 has shifted the risk of delinquent payments from the merchant to the issuer of the credit card, in many cases a bank.


See E. N. Compton, The New World of Commercial Banking (1987).

References in periodicals archive ?
338(h)(10)-1(d)(8) outlines the installment sale treatment for Sec.
Since the total amount was based on a contingency (fluctuations in the Libor), ACM treated the transaction as an installment sale, allowing it to "recover" one-sixth of the basis each year over the term of the contract.
In this situation, it may make sense to simply forgo the installment sale.
A structured sale is a type of installment sale that provides the seller with a guaranteed payment stream from an assignment company.
The partnership closed the installment sale, recognizing a large capital loss with 85% allocated to AHP.
This is where an installment sale could fend off these additional taxes by spreading the income over multiple years.
453A(a)(1) imposes an interest charge on nondealer installment obligations where the property's sales price exceeds $150,000 and the total amount of all installment sale obligations that arose during the tax year and were outstanding at the end of the tax year exceed $.
For IRS purposes, whether or not seller elects the Installment Sale method, the parties must agree on the allocation of purchase price among the various types of assets, using fair market value (FMV] as the guide.
The investor must decide whether the installment sale is better than waiting for a cash buyer, or substantially reducing the price for a quicker cash sale.
See the article "Deferred Gain on the Installment Sale of Intangible Asset, AB 115's Unraveling Begins" (Spidell's CA Tax Letter, October 2003).
With assets other than stock, you may be able to structure an installment sale.
Since Griffith involved an installment sale, the key issue was whether year-of-sale payments received by the taxpayer-seller exceeded 30 percent of the sale price (thus disallowing the installment sales reporting method).