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!
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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.
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.
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.
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.
If you would like to read an official document that supports what abctax55 replied to you see link:
Just because YOU *think* you don't have inventory doesn't make it so. May the IRS never come knocking on your door.
@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!
Your welcome
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