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If a shareholder receives a mixture of such items, unless the shareholder elects out of installment method treatment, the shareholder must report as received all of the cash and other nonqualifying property. This allows shareholders who do not wish to receive installment treatment to elect out of it.
Since the General Utilities doctrine was repealed back in 1986, installment sales have helped shareholders to manage their personal level of gain recognition.
Section 453(h) allows a shareholder who receives certain installment notes in exchange for stock in a Section 331 liquidation to treat the receipt of the payments under the note (rather than the receipt of the note) as payment for the stock.
Of course, this doesn't ameliorate the sting of General Utilities repeal.
Separate elections cannot be made for separate blocks of stock. Now, let's refer to a corporation's use of the installment method itself.
Suppose, for example, that a corporation sells its assets for cash and an installment note.