An obligation, generally in the form of a note or contract arising out of an installment sale, where at least one payment is to be paid in a tax year after the tax year in which the transaction is closed. Unless the seller elects otherwise, he or she must report any gain from the sale ratably as payments are made over the term of the obligation, rather than reporting all the gain in the year in which the sale takes place. This generally favorable tax treatment is not available to every type of seller or for every type of asset. Example: S sells B a parcel of land for $50,000, payment to be made in two equal installments of $25,000, the first to be made not in the year of the sale but on the first day of the following year, and the second to be paid a year after that. Unless S elects otherwise, S will pay no taxes on capital gains from the sale this year; S will report one-half of the gain next year, and the balance the following year.

Din pacate nu stiu cum ii zice in romana.