Client has installment sale, first buyer left after paying many years on it, but this last year quit paying and did not make any payments. Client resold in the same year. She is not related to either of the parties she sold to. Using form 6252 and I can't see where you can end a previous unfulfilled sale, should I leave them both in the tax return with the original sale as 0 received for last year or take that one out? She resold the property for a low price due to the previous owner destroying the property. Client also had to pay the property taxes, where would this cost go?
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1) Delete the old 6252. The taxpayer did not receive any payments this year and won't be receiving any in future years, so there is no need to have that.
2) You need to report income from the 'repossession' of the property as long term capital gain. Add up the portions of all of the prior payments that were not taxable (the amount due to profit from selling the property) and were not interest. Each payment consists of the (a) return of capital, (b) taxable portion from the profit for selling the property, and (c) interest. You need to to add up the "return of capital" portion, and report that as income. See link for details.
https://www.irs.gov/publications/p537#en_US_2018_publink1000221753
3) The amount from #2 that you report as taxable income increases the Basis of the property. So now you enter the sale of the property using that Basis (essentially the same Basis as the original sale).
4) If the second sale of the property was sold at a gain, yes, you can report that on a new 6252.
5) My first thought is that I would just report the real estate taxes as an Itemized deduction on Schedule A. It is possible that the alternative would be to add that to the Basis. I would need to research that a bit more to get a definite answer for that one.
1) Delete the old 6252. The taxpayer did not receive any payments this year and won't be receiving any in future years, so there is no need to have that.
2) You need to report income from the 'repossession' of the property as long term capital gain. Add up the portions of all of the prior payments that were not taxable (the amount due to profit from selling the property) and were not interest. Each payment consists of the (a) return of capital, (b) taxable portion from the profit for selling the property, and (c) interest. You need to to add up the "return of capital" portion, and report that as income. See link for details.
https://www.irs.gov/publications/p537#en_US_2018_publink1000221753
3) The amount from #2 that you report as taxable income increases the Basis of the property. So now you enter the sale of the property using that Basis (essentially the same Basis as the original sale).
4) If the second sale of the property was sold at a gain, yes, you can report that on a new 6252.
5) My first thought is that I would just report the real estate taxes as an Itemized deduction on Schedule A. It is possible that the alternative would be to add that to the Basis. I would need to research that a bit more to get a definite answer for that one.
Property was bought from 3 people and only 2 were in the agreement . Property was sold and now distribution of money is on three parts .
Who third person can report cash in his income taxes?
The check from sale was only on the names of the 2 persons in the agreement how they can give the 3 rd part to the other person? cash as a gift?
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