To locate Form 6252, Installment Sale Income in the program go to:
- Federal Section
- Less Common Income
- Installment Sale Income 6252
What is an installment sale?
An installment sale is a sale of property where you receive at least one payment after the tax year of the sale.
The rules for installment sales do not apply if you elect not to use the installment method or the transaction is one for which the installment method may not apply.
Example: You sell a piece of property for $50,000. The buyer paid $10,000 down and will pay the remaining $40,000 over the next 10 years. Because you will be receiving payments in years after the current year, unless you "elect out", you would report this sale as an installment sale on Form 6252.
Does the Installment sales method have restrictions?
The installment sales method cannot be used for the following:
- Sale resulting in Loss- Do not use Form 6252 for sales that do not result in a gain. Instead, report the sale on Form 4797 (business property) or as a capital loss.
- Stock or securities: You cannot use the installment method to report gain from the sale of stock or securities traded on an established securities market. You must report the entire gain on the sale in the year in which the trade date falls.
- Elect Out: If you elect out, you report all the gain as income in the year of the sale, even if you will receive a payment in a later year. If you "elect out", you would report the sale of the property on Schedule D or Form 4797, not of Form 6252.
What if I forgot to elect out of filing the installment form?
If you filed the return on time, you can amend the return within 6 months of the April due date (no extensions). Write “Filed pursuant to section 301.9100-2” at the top of the amended return.
For more information about installment sales, please reference IRS Publication 537, Installment Sales or the Instructions for Form 6252.