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.

Bibliography

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

References in periodicals archive ?
The new regulations were expected to be ready within 90 days, and no installment sale licenses would be issued based on the previous regulations.
Borrowing costs for the second quarter of 2018 were higher than what would have been anticipated on a normalized basis in Q2 2018, given an additional $600,000 in costs recognized in the quarter, as a result of the installment sale of U.S.
Topsnik agreed, on July 30, 2004, to sell his stock in Gourmet Foods for $5,427,000 in an installment sale, receiving an initial down payment of $1,600,000 and then monthly installments of $42,500 until the remaining $3,827,000 was paid.
A client may choose an installment sale for her business succession plan in order to maintain the desired cash flow, and to defer tax on the installment gain as the proceeds are received.
Using an installment sale rather than reporting all of the gain in one year, is one way to minimize taxes.
Would an installment sale be an appropriate device for transferring the McCourts' highly appreciated, low-basis office building to their children?
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.
An installment sale is a disposition of property (other than marketable securities, certain real property, and "inventory") where at least one payment is to be received by the seller after the close of the taxable year in which the disposition occurs.
Upon the completion of the installment sale transaction underlying the agreement and the purchase order by the company, Tires will own approximately eight million shares of the company's common stock in exchange for approximately $4 million in capital expense contribution out of equipment costs under a purchase agreement by the company of approximately $13 million.
An installment sale is used to ease the burden on the purchaser of acquiring a substantial asset, as the sale spreads the repayment obligation over a period of time, rather than requiring the buyer to make a large single payment.
If reporting via the installment method is available, it might result in lower total taxes going out the door if the taxpayer elects the installment sale method for federal purposes, but elects out of the installment sale for California purposes.
Installment sale accounting is automatic under IRC [section] 453, although taxpayers may elect out and recognize all of the income currently.