Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 56-20

1956-1 C.B. 197

Sec. 453

Full Text

Rev. Rul. 56-20

Under the provisions of a contract of sale, the taxpayer agreed to sell certain real estate for x dollars, a portion of which was payable upon execution of the agreement and the balance payable in cash upon closing of the transaction, with an option reserved by the seller of requiring the buyer to pay a portion in cash and executing notes for the balance. The full amount of the unpaid balance in cash was accepted by the seller at the time the sale was consummated. Held , the acceptance of the full balance in cash determined the manner in which the sale was consummated for Federal income tax purposes. Therefore, since the entire proceeds were paid in cash, the seller may not alter the form of the sale so as to permit him to report the gain realized from the sale of the realty on the installment method.