CCH Federal Taxation Basic Principles
61 of 66
Installment Method—Solution Step One
STEP ONE: CONTRACT INTEREST RATE
The contract interest rate would be divided by two if payments were received by the seller semi-annually. If installments were monthly, divide the rate by 12 and show 12 rows of computations; if quarterly installments, divide by 4, and so on.
Chapter 11, Exhibit 22b