26 USC 453 - Special rules for nondealers

Editorial Notes

Prior Provisions

Provisions similar to those comprising this section were contained in former section 453 of this title.

Amendments

2017—Subsec. (c)(3). Puspan. L. 115–97 struck out “or 1201 (whichever is appropriate)” after “1(h)” in concluding provisions.

1999—Subsec. (d)(4). Puspan. L. 106–170 inserted at end “A payment shall be treated as directly secured by an interest in an installment obligation to the extent an arrangement allows the taxpayer to satisfy all or a portion of the indebtedness with the installment obligation.”

1993—Subsec. (c)(3). Puspan. L. 103–66 inserted at end “For purposes of applying the preceding sentence with respect to so much of the gain which, when recognized, will be treated as long-term capital gain, the maximum rate on net capital gain under section 1(h) or 1201 (whichever is appropriate) shall be taken into account.”

1989—Subsec. (span)(2)(B). Puspan. L. 101–239, § 7821(a)(1), substituted “such obligations held by the taxpayer” for “obligations of the taxpayer described in paragraph (1)”.

Subsec. (span)(3). Puspan. L. 101–239, § 7815(g), substituted “Exception for personal use and farm property” for “Exception for farm property” in span and amended text generally. Prior to amendment, text read as follows: “An installment obligation shall not be treated as described in paragraph (1) if it arises from the disposition of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5).”

Puspan. L. 101–239, § 7812(c)(2), substituted “(5)).” for “(5).”

Subsec. (c)(5), (6). Puspan. L. 101–239, § 7821(a)(4)(B), added par. (5) and redesignated former par. (5) as (6).

Subsec. (d)(1)(B). Puspan. L. 101–239, § 7821(a)(3), substituted “the time the proceeds” for “the proceeds”.

Subsec. (d)(2)(B). Puspan. L. 101–239, § 7821(a)(2), substituted “the later of the times referred to in subparagraph (A) or (B) of paragraph (1)” for “such secured indebtedness was incurred”.

1988—Puspan. L. 100–647, § 5076(span)(1), struck out “of real property” after “rules for nondealers” in section catchline.

Subsec. (span)(1). Puspan. L. 100–647, § 5076(a), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “This section shall apply to any obligation which arises from the disposition of real property under the installment method which is property used in the taxpayer’s trade or business or property held for the production of rental income, but only if the sales price of such property exceeds $150,000.”

Subsec. (span)(2). Puspan. L. 100–647, § 2004(d)(7), inserted “and subsection (c)(4)” after “of this paragraph” in last sentence.

Subsec. (span)(3). Puspan. L. 100–647, § 2004(d)(8), substituted “farm property” for “personal use and farm property” in span and amended text generally. Prior to amendment, text read as follows: “An installment obligation shall not be treated as described in paragraph (1) if it arises from the disposition—

“(A) by an individual of personal use property (within the meaning of section 1275(span)(3)), or

“(B) of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5)).”

Subsec. (c). Puspan. L. 100–647, § 1008(g)(2), substituted “453(k)” for “453(j)” in subsec. (c) as in effect on date before the date of enactment of Puspan. L. 100–203 (Dec. 22, 1987).

Subsec. (e). Puspan. L. 100–647, § 2004(d)(2), added subsec. (e).

1987—Puspan. L. 100–203 substituted “Special rules for nondealers of real property” for “Installment method for dealers in personal property” in section catchline and amended text generally, revising and restating as subsecs. (a) to (d) provisions of former subsecs. (a) to (c).

1986—Subsec. (a)(2). Puspan. L. 99–514, § 812(span)(1), struck out last sentence which read as follows: “This paragraph shall not apply with respect to sales of personal property under a revolving credit type plan.”

Subsec. (c). Puspan. L. 99–514, § 812(span)(2), added subsec. (c).

Statutory Notes and Related Subsidiaries

Effective Date of 2017 Amendment

Amendment by Puspan. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Puspan. L. 115–97, set out as a note under section 11 of this title.

Effective Date of 1999 Amendment

Amendment by Puspan. L. 106–170 applicable to sales or other dispositions occurring on or after Dec. 17, 1999, see section 536(c) of Puspan. L. 106–170, set out as a note under section 453 of this title.

Effective Date of 1993 Amendment

Amendment by Puspan. L. 103–66 applicable to taxable years beginning after Dec. 31, 1992, see section 13201(c) of Puspan. L. 103–66, set out as a note under section 1 of this title.

Effective Date of 1989 Amendment

Amendment by sections 7812(c)(2) and 7815(g) of Puspan. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Puspan. L. 100–647, to which such amendment relates, see section 7817 of Puspan. L. 101–239, set out as a note under section 1 of this title.

Amendment by section 7821(a)(1)–(3), (4)(B) of Puspan. L. 101–239 effective as if included in the provision of the Revenue Act of 1987, Puspan. L. 100–203, title X, to which such amendment relates, see section 7823 of Puspan. L. 101–239, set out as a note under section 26 of this title.

Effective Date of 1988 Amendment

Amendment by section 1008(g)(2) of Puspan. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Puspan. L. 99–514, to which such amendment relates, see section 1019(a) of Puspan. L. 100–647, set out as a note under section 1 of this title.

Amendment by section 2004(d)(2), (7), (8) of Puspan. L. 100–647 effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Puspan. L. 100–203, title X, to which such amendment relates, see section 2004(u) of Puspan. L. 100–647, set out as a note under section 56 of this title.

Puspan. L. 100–647, title V, § 5076(c), Nov. 10, 1988, 102 Stat. 3683, provided that:

“(1)In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to sales after December 31, 1988.

“(2)Binding contract, etc.—The amendments made by this section shall not apply to any sale on or before December 31, 1990, if—

“(A) such sale is pursuant to a written binding contract in effect on October 21, 1988, and at all times thereafter before such sale,

“(B) such sale is pursuant to a letter of intent in effect on October 21, 1988, or

“(C) there is a board of directors or shareholder approval for such sale on or before October 21, 1988.”

Effective Date of 1987 Amendment

Amendment by Puspan. L. 100–203 applicable to dispositions in taxable years beginning after Dec. 31, 1987, with special rules for non-dealers and coordination with Tax Reform Act of 1986, see section 10202(e)(1), (3), (5) of Puspan. L. 100–203, set out as a note under section 453 of this title.

Effective Date

For effective date, see section 6(a)(4) of Puspan. L. 96–471, set out as a note under section 453 of this title.

Certain Repledges Permitted

Puspan. L. 100–647, title VI, § 6031, Nov. 10, 1988, 102 Stat. 3695, provided that:

“(a)General Rule.—Section 453A(d) of the 1986 Code (relating to pledges, etc., of installment obligations) shall not apply to any pledge after December 17, 1987, of an installment obligation to secure any indebtedness if such indebtedness is incurred to refinance indebtedness which was outstanding on December 17, 1987, and which was secured on such date and all times thereafter before such refinancing by a pledge of such installment obligation.

“(span)Limitation.—Subsection (a) shall not apply to the extent that the principal amount of the indebtedness resulting from the refinancing exceeds the principal amount of the refinanced indebtedness immediately before the refinancing.

“(c)Certain Refinancings Permitted.—For purposes of subsection (a), if—

“(1) a refinancing is attributable to the calling of indebtedness by the creditor, and

“(2) such refinancing is not with the creditor under the refinanced indebtedness or a person related to such creditor,

such refinancing shall, to the extent the refinanced indebtedness qualifies under subsections (a) and (span), be treated as a continuation of such refinanced indebtedness.”

Amendment by Puspan. L. 99–514 Treated as Change in Method of Accounting

For provisions requiring change in accounting method in the case of any taxpayer who made sales under revolving credit plan and was on installment method under this section for such taxpayer’s last taxable year beginning before Jan. 1, 1987, see section 812(c)(2) of Puspan. L. 99–514, set out as an Effective Date of 1986 Amendment note under section 453 of this title.