Instructions For Form 6252 printable pdf download

Department of the Treasury

Internal Revenue Service

Instructions for Form 6252

Installment Sale Income

(Section references are to the Internal Revenue Code unless otherwise noted.)

General Instructions

Report the ordinary income from

Sale of Depreciable Property to

sections 1245, 1250, 179, and 291 in full in

Related Person

the year of sale even if no payments were

Paperwork Reduction Act Notice

Generally, if you sell depreciable property

received. Figure the ordinary income to be

We ask for the information on this form to

to a related person (as defined in section

recaptured on Form 4797, Part III.

carry out the Internal Revenue laws of the

453(g)(3)), you may not report the sale

Which Parts To Complete

United States. You are required to give us

using the installment method. For this

the information. We need it to ensure that

purpose, depreciable property is any

For the Year of Sale.—Complete lines 1

you are complying with these laws and to

property that can be depreciated by the

through 26.

allow us to figure and collect the right

person or entity to whom you transfer it.

For Years After the Year of Sale.—

amount of tax.

However, you may use the installment

Complete lines 1 through 4, and Part II, for

The time needed to complete and file

method if you can show to the satisfaction

any year you receive a payment from an

this form will vary depending on individual

of the IRS that avoidance of Federal

installment sale.

circumstances. The estimated average time

income taxes was not one of the principal

Related Party Sales.—If you sold

is:

purposes of the sale (e.g., no significant

marketable securities to a related party,

tax deferral benefits will result from the

Recordkeeping

1 hr., 25 min.

complete Form 6252 for each year of the

sale).

Learning about the

installment agreement even if you did not

If the installment method does not apply,

law or the form

35 min.

receive a payment. See Installment Sales

report the sale on Schedule D or Form

Preparing the form

56 min.

to Related Party, below, for the definition

4797, whichever applies. Treat all

of a related party. For any year after the

Copying, assembling, and

payments you will receive as if they were

year of sale, complete lines 1 through 4,

sending the form to the IRS

20 min.

received in the year of sale. Use fair

and Part III. If you received a payment,

If you have comments concerning the

market value for any payment that is

also complete Part II.

accuracy of these time estimates or

contingent as to amount. If the fair market

If you sold property other than

suggestions for making this form more

value cannot be readily determined, basis

marketable securities to a related party,

simple, we would be happy to hear from

is recovered ratably.

complete the form for the year of sale and

you. You can write to both the IRS and the

for 2 years after the year of sale even if

Pledge Rule

Office of Management and Budget at the

you did not receive a payment. If during

addresses listed in the instructions for the

If an installment obligation from a

this 2-year period you did not receive an

tax return with which this form is filed.

nondealer disposition of real property used

actual or deemed payment, complete lines

in a trade or business or held for the

Purpose of Form

1 through 4, and Part III. After this 2-year

production of rental income with a sales

period, see For Years After the Year of

Use Form 6252 to report income from

price over $150,000 is pledged as security

Sale, above.

casual sales of real or personal property

on debt after December 17, 1987, treat the

(other than inventory) if you will receive any

net proceeds of the secured debt as a

Installment Sales to Related Party

payments in a tax year after the year of

payment on the installment obligation. This

A special rule applies to a first disposition

sale.

rule applies to the disposition of any

(sale or exchange) of property under the

property under the installment method

If any part of an installment payment you

installment method to a related party who

after 1988 with a sales price over

received is for interest, be sure to report

then makes a second disposition (sale,

$150,000, except for farm property and

that interest on the appropriate form or

exchange, gift, or cancellation of

personal use property disposed of by an

schedule. Do not report interest received,

installment note) before making all

individual. The amount treated as a

carrying charges received, or unstated

payments on the first disposition. For this

payment cannot exceed the excess of the

interest on this form. Get Pub. 537,

purpose, a related party includes your

total contract price over any payments

Installment Sales, for details on unstated

spouse, child, grandchild, parent, brother,

received under the contract before the

interest.

sister, or a related corporation, S

secured debt was obtained.

You cannot use the installment method

corporation, partnership, estate, or trust.

The pledge rule does not apply to

for sales after 1986 of stock or securities

See section 453(f)(1) for more details.

pledges made after December 17, 1987, if

traded on an established securities market.

Under this rule, you treat part or all of

the debt is incurred to refinance the

See section 453(k).

the amount the related party realized (or

principal amount of a debt that was

Do not use Form 6252 if you elect not to

the fair market value if the disposed

outstanding on December 17, 1987, AND

report the sale on the installment method.

property is not sold or exchanged) from

was secured by nondealer real property

To elect out, see the Instructions for

the second disposition as if you received it

installment obligations on that date and at

Schedule D (Form 1040), Capital Gains

from the first disposition at the time of the

all times after that date until the

and Losses, or Form 4797, Sales of

second disposition. Figure the gain, if any,

refinancing occurred. However, this

Business Property. If you do not use the

on lines 30 through 37. This rule does not

exception does not apply to the extent that

installment method, report the sale on

apply to any of the exceptions listed on

the principal amount of the debt resulting

Schedule D or Form 4797, whichever

line 29.

from the refinancing exceeds the principal

applies.

amount of the refinanced debt immediately

Note: Generally, once you file Form 6252,

before the refinancing. Also, the pledge

you cannot later elect out of the installment

rule does not affect refinancing due to the

method. See Pub. 537 for details.

calling of a debt by the creditor as long as

the debt is then refinanced by a person

Cat. No. 64262Q

Instructions For Form 6252

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