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Form 6252 – Installment Sale Income 2022

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Make the Most of Your Investment Income by Filing Form 6252: Installment Sale Income

Form 6252 is an Internal Revenue Service (IRS) form used to report an individual’s income from the sale of property when payments are made on an installment basis. This form is used to figure and report any gain resulting from the difference between the amount realized from the sale, less any expenses allocated to it, and the adjusted basis of the property sold. The information derived from Form 6252 must be reported according to the instructions for Schedule D (Form 1040). You can download a copy of these tax forms through the IRS or, alternatively, this website.

The Benefit of Form 6252 in Real Estate Installment Sales

This form may be of particular value for taxpayers who sell personal property or real estate property with a long-term payment plan, where part of the income comes in each year with no taxes due that year because some of the money was paid in prior years.

In such cases, Form 6252 should be filled out each year as installment payments are received until it shows all gains have been accounted for. In addition, this form can also be used to calculate losses related to installment sales that may not otherwise qualify as capital losses.

Reporting information on property sales via installment method accurately is essential since mistakes could result in interest and penalty charges. By filling out Form 6252 when filing taxes, taxpayers who have received at least one payment via an installment agreement during the tax year can report income and ensure that the sale will be properly accounted for.

Examining the Contents of Form 6252

Form 6252 contains several lines that must be filled out to calculate the tax implications of an installment sale on real or personal property. A breakdown of these sections is provided below as guidance for accomplishing this form.

Make sure to complete other relevant forms, such as Form 8949: Sales and Other Dispositions of Capital Assets if you are opting to defer any capital gains into a Qualified Opportunity Fund.

In addition, you may also need to include any other reports related to the installment sale, such as a copy of the contract and its addendums. There is also space for you to report your total taxable income from all sources so that you can accurately report your total taxes due for the year.

Part 0: Taxpayer Details

The form starts with identification information, such as the name and employer identification number) of the taxpayer, dates of when the property was acquired and when the sale occurs, along with the total amount realized from the sale.

Part II: Information on Installment Sale Income

This section provides information about any installment sale income that you have received during a certain period of time over one or more years. It also includes details about capital gains taxes that are due on installment sales transactions.

Part I: Details for Gross Profit and Contract Price

This part includes details about the gross profit you received from the sale and the contract price. It asks for both costs related to selling and buying, as well as other expenses that are directly associated with the sale.

Part III: Related Party Installment Sale Income

Part III requires taxpayer’s information regarding the transfer of property between related parties such as a parent-child relationship, business partners, etc., which may be subject to special tax treatment under Internal Revenue Code (IRC) Section 453B.

FAQ About Form 6252

Form 6252 should be used to report income from an installment sale of a property. The taxpayer must enter their name and identification number, as well as information regarding the sale, such as the purchase and sales dates.
Form 6252 should be filed by taxpayers who have received at least one payment under an installment agreement during the tax year for a sale of personal or real estate property.
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