What does the installment method for reporting income typically apply to?

The installment method for reporting income is specifically designed for installment sales, which occur when the seller allows the buyer to make payments over time rather than paying the full purchase price upfront. This method enables the seller to recognize income as payments are received, rather than at the time of sale. This is particularly beneficial for tax purposes because it spreads the tax liability over the years in which payments are made, allowing for better cash flow management.

The other types of income listed do not typically utilize the installment method. For instance, salary income is recognized in the year it is earned, regardless of when the payment is made. Similarly, income from services rendered is accounted for when the service is performed, and all types of investment income, such as dividends or interest, are generally reported in the year they are earned or accrued. Thus, the installment method is mainly applicable to those sales where payments are received over time, which is why "income from installment sales" is the correct response.