Installment Sale - Stepped up Basis?

[Snaggletooth]

Taxpayer, 82 years old, sells land for $500,000 on installment basis,
Original Cost $50,000. Collects for a couple years, then dies. At time of death,
some $400,000 remains on the loan, (with of course $360,000 in unrecognized
profit).

What is the new basis for the estate? obviously $400,000 which draws interest.
The interest is fully reportable as current income to the estate (or beneficiaries
if distributed currently).

What about the $360,000 in unrecognized profit? Does it "vanish?"

Thanks in advance - Ron Jordan

[Gene V]

NO stepped up Basis

This from Pub. 559

Installment obilgations. If the decedent had sold property using the installment method and you collect payments on an installment obligation you acquired from the decedent, use the same gross profit percentage the decedent used to figure the part of each payment that represents profit. Include in you income the same profit the decedent would have included had death not accurred. See Pub 537 for more information.

[jainen]

Installment sale

Installment sale is a method of reporting. It doesn't affect the underlying facts of basis and sale price on which gain was calculated.