It's my understanding that items that produce 'Ordinary Income' such as Unrealized Receivables & Substantially Appreciated Inventory DO NOT qualify for Installment Sale Treatment. It is also my understanding that 751 depreciation recapture also does not qualify for Installment Sale Treatment.
Also I believe that this Ordinary Income is reported even though the overall transaction is a loss.
Tax Basis $400,000
Sale Proceeds (300,000)
Overall Loss (100,000)
Section 751 50,000 Recapture Ordinary Income
Capital Loss (150,000) Long Term Capital Loss
Am I right or wrong related to this matter??????
