Chap. 420.—An ACT to amend the Tax Code of Virginia by adding a new sec-
tion numbered 30-a, relating to the installment basis of reporting incor 296)

Approved April 1, 1948

Be it enacted by the General Assembly of Virginia:

1. That the Tax Code of Virginia be amended by adding a new
section numbered thirty-a, the new section being as follows:

Section 30-a. Installment basis—(a) Dealers in personal pro-
perty—A taxpayer who regularly sells or otherwise disposes of personal
property on the installment plan may return as income therefrom in
any taxable year that portion of the installment payments actually
received in that year which the gross profit realized or to be realized
when payment is completed, bears to the total contract price.

(b) Sales of realty and casual sales of personalty—In the case
(1) of a casual sale or other casual disposition of personal property
(other than property of a kind which would properly be included in the
inventory of the taxpayer if on hand at the close of the taxable year),
for a price exceeding one thousand dollars ($1,000.00) or (2) of a sale
or other disposition of real property, if in either case the initial payments
do not exceed thirty per centum of the selling price, the income may be
returned on the basis and in the manner above prescribed in this section.
As used in this section the term “initial payments” means the payments
received in cash or property other than evidences of indebtedness of the
purchaser during the taxable period in which the sale or other disposition
is made.

(c) Change from accrual to installment basis.—If a taxpayer entit-
led to the benefits of subsection (a) elects for any taxable year to report
his net income on the installment basis, then in computing his income
for the year of change or any subsequent year, amounts actually received
during any such year on account of sales or other dispositions of property
made in any prior year shall not be excluded.

(d) Gain or loss upon disposition of installment obligations.—If
an installment obligation is satisfied at other than its face value or dis-
tributed, transmitted, sold, or otherwise disposed of, gain or loss shall
result to the extent of the difference between the basis of the obligation
and (1) in the case of satisfaction at other than face value or a sale
or exchange, the amount realized, or (2) in case of a distribution, trans-
mission, or disposition otherwise than by sale or exchange, the fair
market value of the obligation at the time of such distribution, transmis-
sion, or disposition. Any gain or loss so resulting shall be considered
as resulting from the sale or exchange of the property in respect of which
the installment obligation was received. The basis of the obligation shall
be the excess of the face value of the obligation over an amount equal to
the income which would be returnable were the obligation satisfied in
full. This subsection shall not apply to the transmission at death of in-
stallment obligations if there is filed with the Department of Taxation, at
such time as it may by regulation prescribe, a bond in such amount and
with such sureties as it may deem necessary, conditioned upon the
return as income, by the person receiving any payment on such obliga-
tions, of the same proportion of such payment as would be returnable as
income by the decedent if he had lived and had received such payment.

2. This act shall be in force for the taxable year nineteen hundred
forty-eight, and for every taxable year thereafter until otherwise provided
by law.