[Code of Federal Regulations]
[Title 26, Volume 6]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.453-4]

[Page 116]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
DEFERRED COMPENSATION, ETC.--Table of Contents
 
Sec. 1.453-4  Sale of real property involving deferred periodic payments.

    (a) In general. Sales of real property involving deferred payments 
include (1) agreements of purchase and sale which contemplate that a 
conveyance is not to be made at the outset, but only after all or a 
substantial portion of the selling price has been paid, and (2) sales in 
which there is an immediate transfer of title, the vendor being 
protected by a mortgage or other lien as to deferred payments.
    (b) Classes of sales. Such sales, under either paragraph (a) (1) or 
(2) of this section, fall into two classes when considered with respect 
to the terms of sale, as follows:
    (1) Sales of real property which may be accounted for on the 
installment method, that is, sales of real property in which (i) there 
are no payments during the taxable year of the sale or (ii) the payments 
in such taxable year (exclusive of evidences of indebtedness of the 
purchaser) do not exceed 30 percent of the selling price, or
    (2) Deferred-payment sales of real property in which the payments 
received in cash or property other than evidences of indebtedness of the 
purchaser during the taxable year in which the sale is made exceed 30 
percent of the selling price.
    (c) Determination of ``selling price''. In the sale of mortgaged 
property the amount of the mortgage, whether the property is merely 
taken subject to the mortgage or whether the mortgage is assumed by the 
purchaser, shall, for the purpose of determining whether a sale is on 
the installment plan, be included as a part of the ``selling price''; 
and for the purpose of determining the payments and the total contract 
price as those terms are used in section 453, and Secs. 1.453-1 through 
1.453-7, the amount of such mortgage shall be included only to the 
extent that it exceeds the basis of the property. The term ``payments'' 
does not include amounts received by the vendor in the year of sale from 
the disposition to a third person of notes given by the vendee as part 
of the purchase price which are due and payable in subsequent years. 
Commissions and other selling expenses paid or incurred by the vendor 
shall not reduce the amount of the payments, the total contract price, 
or the selling price.

[T.D. 6500, 25 FR 11715, Nov. 26, 1960]