Do a search on this forum and you will see that this question has been asked and answered before.... the installment method picks up the % gain on the principal each year as the principal payments are received and the interest income is 100% taxable of course when received... You have to allocate the sales price and the sales commissions,etc. on the asset entry worksheets to each of the schedule e assets... You link to form 6252.. Each year you enter the principal payments received and interest received on the applicable 6252 worksheet and it'll automatically take care of the rest... Pro Series does a good job on this... the down payment is treated just like any other principal payment, ie the percentage gain is taxable on the principal in the year it is received...