The Senate Finance Committee approved legislation yesterday designed to simplify the tax treatment of capital gains from installment sales -- sales of property or assets involving two or more payments.

The 11th-hour action, which followed months of wrangling among legislators, Treasury officials and tax lawyers, came barely in time to push the bill through the Senate before the pre-election recess.

The House already has passed similar legislation Committee sources said they hoped to see the bill scheduled for Senate floor action early next week before the chamber recesses for the October-November campaign period.

The bill is intended primarily to crack down on abuses in which owners can escape immediate payment of taxes on profits from property sales by selling first to a relative who quickly resells the asset to a third party.

Under current law, the scheme allows the owner to reap the benefits from the high sales price while delaying most of the tax liability on the capital gain for years.

Finance panel Chairman Russell B. Long (D-La.), who pressed for the bill in committee, termed the measure one of the most significant "reform" measures Congress has taken up this year.

The bill had been scheduled to be approved by the committee on Tuesday, but the vote was postponed after a parliamentary challenge by Sen. Harry F. Byrd (Ind-Va.), who objected to one of its provisions.

Yesterday's vote by the panel was unanimous.

Along with the crackdown on deferral of capital gains taxes, the legislation also would make property eligible for reporting as an installment sale even if payment is made in one lump sum instead of by at least two separate payments.