American College Exam HS330 Topic 1 Question 24 Discussion

The owner of a successful business wishes to sell it to his employee-son so that he can retire. The business is worth substantially more than the owner's basis. The owner and the employeeson have agreed to an installment sale. Which of the following statements concerning this sale is (are) correct?

l. The present value of any unpaid installments remaining at the owner's death is includible in his estate.

ll. lnstallment payments are received free of income tax until the seller recovers his basis.