Under the new regulations, each payment is a separate transaction and each payment gets its own 180 days. If you want to pick up all gains right away to increase the immediate contribution to an OZ fund, you can elect out of the installment sale.
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What happens with the 180-day period if a taxpayer receives multiple payments under an installment sale?
What happens with the 180-day period if a taxpayer receives multiple payments under an installment sale?
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With installment sales, you can use the year-end or the date the cash is received.
The final regulations made a number of taxpayer-friendly adjustments to the investment window. They appear to allow the taxpayer to look at each installment separately. The 180-day clock starts on the date a payment is received or the last day of the taxable year that gain would be recognized for tax purposes. If there are multiple installments in a single year, this allows the taxpayer to use year-end for all, or have multiple 180-day clocks tied to each cash receipt. Note that the application of the final regulations before their enactment date requires relying fully on the new guidance.
Installment sales provide optionality insofar as every installment payment allows for the taxpayer to select the 180-day timer to begin either on the date the payment arrives or the last date of the taxable year in which it arrives. This flexibility is unique to installment sales.
If a taxpayer receives multiple payments of installment gains, he or she can either elect to have as many 180 days periods applying to each payment independently or elect to have one 180 starting on the last day of the taxable year.
The 180-day count for each payment starts when it is received.
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