How to report 6252 installment sale income

fu · ‎03-28-2020

I have questioned this for years and have seen tax preparers transfer my 6252, line to many places. I have real property. i.e. single family homes that I sell on installment sale contracts. This is my buisness and this is my job if that matters. I buy homes, fix them up, sell them on land installment contract, and collect payments each year. I use the installment method for all of them.

Are my properties considered Section 1231? Where does line 26 of 6252 go? 4797, line 4 or 15, OR, Sch. D line 4 or 11? Does it depend on how long I've owned the property? One buyer on installment sale paid me off with a lump sum this year. Does anything change or do I still fill out the 6252 with the existing Gross Profit Percentage, and transfer line 26 to Sch. D or 4797 and add it to all the other installment sales I have?

Thanks for your response!

abctax55 · ‎03-28-2020

Chris - at the risk of appearing rude.... March 28 on ANY year is a bad, bad time to ask a DIYer question of tax professionals. And this year, well... my words fail me.

AND, if flipping houses is truly your business - well, I hate to be the bearer of bad news; those houses are inventory and inventory doesn't qualify for installment sale treatment.

Good luck.

HumanKind... Be Both

itonewbie · ‎03-29-2020

Good to see there's still job security in this business. A call to a competent tax professional is well worth the time (and cost) before engaging in a business endeavor and structuring deals that could potentially have a material impact on taxes. Even if a transaction could otherwise be valid for tax planning, there are usually things that need to be lined up to make it work.

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Still an AllStar

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fu · ‎03-29-2020

Thanks for your response. No inventory here. Installment sales are all current. In 3 decades I have never had "inventory." If payments go late, I repossess, refurbish and re sale. Sorry to ask so late. I'd delete the thread if possible.

Terry53029 · ‎03-29-2020

If you would like to read an official document that supports what abctax55 replied to you see link:

https://scholar.google.com/scholar_case?case=10278851105356139759&q=United+States+v.+Winthrop&hl=en&...

abctax55 · ‎03-29-2020

Just because YOU *think* you don't have inventory doesn't make it so. May the IRS never come knocking on your door.

HumanKind... Be Both

abctax55 · ‎03-29-2020

@Terry53029

Thanks for that link.

HumanKind... Be Both

Just-Lisa-Now- · ‎03-29-2020

@abctax55 wrote:

Just because YOU *think* you don't have inventory doesn't make it so. May the IRS never come knocking on your door.

That will be one ugly audit!

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

Terry53029 · ‎03-29-2020

Your welcome