Seller Financed Loan on installment sale - seller sold loan - how to report

[csanchez]

Seller carried the loan and installment sale was setup on Form 6252 in 2020. Principle & interest received were recorded for 2020. Seller sold note in 2021. How to report?

[dd4vols]

You report receipt of the remaining note rec as all being received in current year on Form 6252.  Part II, Line A1  (which actually could be some from the original borrower and some from note purchaser.). and don't overlook any interest rec;d before the note sale.

[csanchez]

Thank you. I will check it out.

[csanchez]

What if note sold for more than remaining installment amount?

[TaxGuyBill]

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@csanchez wrote:

What if note sold for more than remaining installment amount?

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How could that happen?  Why would anybody pay MORE than the remaining amount?  If that were to happen, there would seem to be more to the situation.

[csanchez]

I may have set up the installment sale incorrectly. I entered the selling price and the cost basis (which was very low) and I entered the amount of the loan on line 6. Selling price & loan amount were not the same since the purchaser paid a down payment.

[qbteachmt]

"What if note sold for more than remaining installment amount?"

How much more? It is possible that the note is favorable as investment, such as, the note carried 7% interest, and the seller accepts principal + 2%.