[Code of Federal Regulations]
[Title 26, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.381(c)(8)-1]

[Page 407-408]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.381(c)(8)-1  Installment method.

    (a) Carryover requirement. (1) Section 381(c)(8) provides that if, 
in a transaction to which section 381(a) applies, an acquiring 
corporation acquires installment obligations, the income from which the 
distributor or transferor corporation has elected under section 453 and 
the regulations thereunder to report on the installment method, then the 
acquiring corporation shall be treated as the distributor or transferor

[[Page 408]]

corporation would have been treated under section 453 had it not 
transferred the installment obligations. Thus, if the distributor or 
transferor corporation had properly elected to return income from the 
sale or other disposition of property giving rise to the obligations on 
the installment method, then the acquiring corporation shall be required 
to return the income from all such installment obligations in the same 
manner and to the same extent as the distributor or transferor 
corporation, unless consent of the Commissioner to use another method is 
obtained in accordance with paragraph (e) of Sec. 1.446-1. Amounts 
received by the acquiring corporation on or after the date of 
distribution or transfer with respect to an installment sale made by the 
distributor or transferor corporation will not be taken into account in 
applying the limitation under section 453(b)(2) with respect to the 
amount of payments received in the year of sale or other disposition.
    (2) Section 381(c)(8) and this section have no application to sales 
or other dispositions of property made by the acquiring corporation on 
or after the date of distribution or transfer. For provisions defining 
the date of distribution or transfer, see Sec. 1.381(b)-1(b). See 
section 381(c)(4) and the regulations thereunder for rules relating to 
the proper method or combination of methods of accounting to be used by 
the acquiring corporation.
    (b) Basis of obligations. The basis in the hands of an acquiring 
corporation of installment obligations described in section 381(c)(8) 
and paragraph (a) of this section shall be the same as in the hands of 
the distributor or transferor corporation.
    (c) Repossession of property sold in prior years. If the acquiring 
corporation repossesses property, previously sold by the distributor or 
transferor corporation, by reason of default by the purchaser in payment 
of the acquired installment obligations, then the acquiring corporation 
shall be treated as though it were the vendor corporation for purposes 
of determining, under section 453 and the regulations thereunder, the 
gain, loss, income, or deduction with respect to the property 
repossessed.

[T.D. 6559, 26 FR 2983, Apr. 7, 1961]