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Flashcards in INSTALLMENT SALES Deck (9):
1

YOU BETTER GET THIS, DON'T KNOW WHY

You need to calculate the gross profit

The gross profit is the normal stuff Sales Price - Basis = Gross Profit
Looks like liabilities are assumed and these are included in sales price

Now instead of dividing the profit realized by the basis
you...
divide it by the sales price net of what ever liability is assumed
this is the% you apply to the payments to get the amount of gain recognized each year,
GAIN NOT ORDINARY INCOME
Not for regular dealers who sell stuff on installment contracts

2

On installment its just the assumed liability that's netted out not the _____

Down payment

3

Installment sale of property you've been depreciating.

It says it's ordinary income to the extent of the depreciation recapture.

4

What if it's an installment sale and the mortgage they assume is greater than the contract price. Any installment payments are treated how.

As 100% gross profit.

5

Net operating loss is a tax concept not a book concept.
It means that the corporations ______ exceed it's _______ resulting in _____ taxable income.

Figure out the NOL here:
900,000 operating income
110,000 operating expenses
100,000 dividend income, from less than 20% owned domestic corp.

Corps deductions exceed it's book income resulting in negative taxable income.

900-110 = operating loss of (200) + Dividend income 100 = 100 Less DRD 70% = 170 NOL

IOW DRD acts as though corporation only received 30% of that income so only 30 is offsetting the 200 NOL.

6

DRD Rules
70% - 80% of the lesser of Taxable Income W/the Dividend (b4 the deduction) or the Dividend whichever is less (or equal to)

Repetition:
Gross taxable income with dividend (add the dividend to the operating income)
Compare to Dividend Amount
% applied to whatever is lower or equal

7

Article 2 UCC is for ______

ARTICLE 2 IS FOR SALE OF GOODS

8

WHAT HAS TO BE IN A UCC SALES CONTRACT

Names, quantity, price, place of delivery, payment terms.

Only quantity I think

Of course this is what the question says until 2 questions later it says no quantity is required for an output contract - which I guess is when someone offers to buy all your output

9

firm offer what is it
what article of the UCC

Article 2 Sale of Goods
Assurance in writing signed by a merchant that the offer will remain open
If no time is stated then time will be a reasonable time, but not to exceed 3 months
A rain check is an example