Reporting an Installment Sale Form 6252.Use Form 6252 to report a sale of property on the installmentmethod. The form is used to report the sale in the year it takes placeand to report payments received in later years. Also, if you soldproperty to a related person, you may have to file the form each yearuntil the installment debt is paid off, whether or not you receive apayment in that year. Related person.If you sell marketable securities to a related person, completePart III, Form 6252, for each year of the installment agreement, evenif you do not receive a payment in that year. If you sell property other than marketable securities to a relatedperson, complete Part III for the year of sale and the 2 yearsfollowing the year of sale, even if you do not receive a payment.After this 2-year period, you do not have to fill out Part III. If the related person to whom you sold your property disposes ofit, you may have to immediately report the rest of your gain in PartIII. See Rule 2--Sale and Resale under Sale toRelated Person, earlier, for more information. Several assets.If you sell two or more assets in one installment sale, you mayhave to separately report the sale of each asset. The same is true ifyou sell all the assets of your business in one installment sale. SeeSingle Sale of Several Assets and Sale of a Business,earlier. If you have only a few sales to separately report, you can use aseparate Form 6252 for each one. However, if you have to separatelyreport the sales of many assets that you sold together, do not preparea separate Form 6252 for each one. Instead, prepare one Form 6252 andattach a schedule with all the information for each asset that isrequired by Form 6252. Complete Form 6252 by following the stepslisted below. Answer the questions at the top of the form. In the year of sale, do not complete Part I. Instead, write"See attached schedule" in the margin. For Part II, enter the total for all the assets on lines 24,25, and 26. For Part III, answer all the questions that apply. If noneof the exceptions under question 29 apply, enter the totals on lines35, 36, and 37 for the disposed assets. Special situations.If you are reporting payments from an installment sale as income inrespect of a decedent or as a beneficiary of a trust, including apartial interest in such a sale, you may not be able to provide allthe information asked for on Form 6252. To the extent possible, followthe instructions given above and provide as many details as possiblein a statement attached to Form 6252. For more information on how to complete Form 6252, see the forminstructions. Other forms.The gain from Form 6252 is carried over and entered on Schedule D(Form 1040), Capital Gains and Losses, Form 4797,Sales of Business Property, or both. Schedule D (Form 1040).Enter the gain figured on Form 6252 for personal-use property(capital assets) on Schedule D (Form 1040). If your gain from theinstallment sale qualifies for long-term capital gain treatment in theyear of sale, it will continue to qualify in later tax years. Yourgain is long-term if you owned the property for more than one yearwhen you sold it. Although the references in this publication are to the Schedule Dfor Form 1040, the rules discussed also apply to Schedule D for Forms1041 (estates and trusts), 1065 (partnerships), 1120 or 1120-A(corporations), or 1120S (S corporations). Form 4797.An installment sale of property used in your business or propertythat earns rent or royalty income may result in a capital gain, anordinary gain, or both. All or part of any gain from its dispositionmay be ordinary gain from depreciation recapture. Use Form 4797 toreport these transactions and to determine the ordinary or capitalgain or loss. Form 4797 is used with estate and trust, partnership, corporation,and S corporation returns, as well as individual returns. prenotazioni albergo BolognaPayments past due.If you use the cash method of accounting, do not report payments ofprincipal you have not yet received, even if they are past due.However, if you use an accrual method of accounting, you accrue anypayment due, even if you have not received it. Examples The following examples illustrate how to fill out Form 6252. Samplefilled-in forms follow. Example 1 On November 1, 1999, Mark Moore sold a lot that he bought onFebruary 17, 1992, for $2,650. He borrowed more on the lot than he hadpaid for it. At the time of the sale, $6,500 remained outstanding onthese loans. In the sales contract, the buyer agreed to assume theseloans and pay Mark $200 a month (plus 7% interest) for 3 years. Inaddition, the buyer made a down payment of $1,000 on the sale. Mark fills out his 1999 Form 6252 as follows: Line 1.Mark writes in a description of the lot he sold. Lines 2a and 2b.Mark enters the date he acquired the lot and the date he sold it. Line 3.Because Mark sold the lot to Acme Design, a partnership of which heis a member, he checks the "Yes" box. Line 4.The property Mark sold was not a marketable security (such as stockor a bond). He checks the "No" box. Because he sold the lot to arelated person, he must complete Part III for 1999 and the next 2years. Part I.Mark uses this part of the form to figure the contract price andhis gross profit on the sale. Line 5.Mark enters the selling price, $14,700. This includes the $1,000down payment, the $7,200 (36 $200) in monthly payments he isto receive, and the $6,500 in loans the buyer assumes. Line 6.Mark enters the $6,500 in outstanding loans that the buyer assumes. Line 7.Mark subtracts line 6 from line 5 and enters the difference,$8,200. Line 8.Because he did not make any improvements to the lot, Mark's basisat the time of the sale was the lot's cost of $2,650. Lines 9 and 10.Mark did not take depreciation deductions on the lot (land is neverdepreciable). The amount on line 8 carries over to line 10. Line 11.Mark's only selling expenses were $150 in legal fees. If he hadadvertised the lot for sale or paid commission on the sale, he wouldhave included those amounts also. Line 12.Since no depreciation was claimed on the land, Mark has norecapture of income. Line 13.Mark's installment sale basis is $2,800, the total of his adjustedbasis in the property plus his selling expenses. Line 14.Mark subtracts line 13 from line 5 and enters the result, $11,900. Lines 15 and 16.The property Mark sold was not his home. He carries the amount online 14 to line 16. This is his gross profit on the sale. Line 17.Mark subtracts line 13, $2,800, from line 6, $6,500. The result,$3,700, is the amount by which the assumed loans are more than hisinstallment sale basis in the property. This amount is treated as apayment in the year of sale on line 20. Line 18.The contract price is the sum of all payments Mark will receive onthe sale. This includes the down payment and all installment paymentshe will receive (line 7). It also includes the "payment" figuredon line 17. Part II.In this part, Mark figures the gain from the sale he must reportfor 1999. Line 19.Mark's gross profit percentage for the sale is 100%. This is thegross profit on line 16, $11,900, divided by the contract price online 18, also $11,900. Line 20.Mark carries the amount he treats as a payment on line 17 to thisline and it is added to the other payments he received in the year ofsale. Line 21.At the time of the sale, Mark received a down payment of $1,000. InDecember 1999, he received his first monthly installment payment. Thetotal payment was $242, consisting of $42 interest (one month'sinterest on $7,200 figured at 7% a year) and $200 principal. This isthe only installment payment he received in 1999. He enters the totalreceived during 1999, $1,200 ($1,000 + $200), on this line. He reportsthe $42 interest on Form 1040. Line 22.Mark enters $4,900, the sum of line 20 and line 21. This is thetotal of all payments he is considered to have received in 1999. Line 23.Since 1999 is the year of sale, Mark makes no entry here. Line 24.The gross profit percentage (line 19) is 100%. Therefore, theentire amount on line 22, $4,900, is taxable gain. Mark enters thisamount on line 24. Lines 25 and 26.Because the lot Mark sold was not depreciable property, he does nothave to recapture any depreciation deductions as ordinary gain. Allhis gain on the sale is long-term capital gain. He carries the amounton line 26 to Schedule D (Form 1040) where it is included with otherlong-term capital gains. Part III.Because Mark sold the lot to his partnership, a "related person,"he must fill out this part. The property he sold was not a marketablesecurity and he completes this part for 1999, 2000, and 2001. Line 27.cheap hotels in RomeMark enters the name, address, and employer identification numberof the partnership that bought the lot. Line 28.The partnership did not sell the lot in 1999. Mark checks the "No"box and he does not have to fill out the rest of Part III. Example 2 In December 1998, Cora Blue sold a painting she inherited. Thebuyer paid her $700 down and gave her an installment note for $3,800.The note calls for quarterly payments of $530 until the $3,800 debt ispaid off, in about 2 years. Each $530 payment includes interestfigured at 10% a year on the outstanding debt. She received her first4 payments on the note in 1999. The principal and interest shereceived in each payment is given in the table below: Payment Interest Principal First $ 95.00 $ 435.00 Second 84.13 445.87 Third 72.98 457.02 Fourth      61.55     468.45 $313.66 $1,806.34 Cora rounds off cents on her tax return. She reports $314 interestas ordinary income on Form 1040. She completes Form 6252 as follows: Line 1.Cora states the property she sold was an oil painting. Lines 2a and 2b.She enters the date she acquired the painting and the date she soldit. Line 3.The buyer was not related to Cora. She checks the "No" box. Line 4.Because she checked "No" to question 3, Cora does not have toanswer this question or fill out Part III of the form. Part I.Cora completed Part I of her Form 6252 for the year of sale, 1998.She does not fill it out for the remaining years of the installmentsale. Part II.This is the only part of Form 6252 that Cora fills out. Line 19.Cora figured a gross profit percentage of 22.7% on her 1998 Form6252. She uses the same percentage on her 1999 Form 6252. Line 20.Since this is not the year of sale, Cora enters zero on this line. Line 21.Cora enters the total amount (minus interest) that she received onthe sale in 1999, $1,806. Line 22.The amount on line 21 carries over to line 22. Line 23.Before 1999, Cora received only the $700 down payment. Line 24.Cora multiplies the gross profit percentage of 22.7% (line 19), bythe amount she was paid in 1999 (line 22), $1,806. The result, $410,is the gain she had on the sale in 1999. Lines 25 and 26.Cora did not use the painting in a business. It was not depreciableand the recapture rules do not apply. The amount on line 24 carriesover to line 26. Her gain is long-term capital gain. She carries theamount on line 26 to Schedule D (Form 1040), where it is included withother long-term capital gains. Form 6252 for Mark Moore Form 6252 for Cora Blue