Fillable Form 6252 - Installment Sale Income

Form 6252 (2017)

Page

General Instructions

Later Years

Sale of Depreciable Property to

Related Person

Complete lines 1 through 4 and Part II

Section references are to the Internal

for any year in which you receive a

Generally, if you sell depreciable

Revenue Code unless otherwise noted.

payment from an installment sale.

property to a related person (as defined

Future Developments

in section 453(g)(3)), you can’t report the

If you sold a marketable security to a

sale using the installment method. For

related party after May 14, 1980, and

For the latest information about

this purpose, depreciable property is

before 1987, complete Form 6252 for

developments related to Form 6252 and

any property that (in the hands of the

each year of the installment agreement,

its instructions, such as legislation

person or entity to whom you transfer it)

even if you didn’t receive a payment.

enacted after they were published, go to

is subject to the allowance for

Complete lines 1 through 4. Complete

depreciation. However, you can use the

Part II for any year in which you receive a

installment method if you can show to

Purpose of Form

payment from the sale. Complete Part III

the satisfaction of the IRS that avoidance

unless you received the final payment

Use Form 6252 to report income from an

of federal income taxes wasn’t one of

during the tax year.

installment sale on the installment

the principal purposes of the sale (for

After 1986, the installment method

method. Generally, an installment sale is

example, no significant tax deferral

isn’t available for the sale of marketable

a disposition of property where at least

benefits will result from the sale). If the

securities.

one payment is received after the end of

installment method doesn’t apply,

the tax year in which the disposition

If you sold property other than a

report the sale on Form 4797, Form

occurs. Ordinarily, an installment sale

marketable security to a related party

8949, or Schedule D, whichever applies.

doesn’t include a disposition of personal

after May 14, 1980, complete Form 6252

Treat all payments you will receive as if

property by a person who regularly sells

for the year of sale and for 2 years after

they were received in the year of sale.

or otherwise disposes of personal

the year of sale, even if you didn’t

Use FMV for any payment that is

property of the same type, or a

receive a payment. Complete lines 1

contingent as to amount. If the FMV

disposition of real property which is held

through 4. Complete Part II for any year

can’t be readily determined, basis is

by the taxpayer for sale to customers in

during this 2-year period in which you

recovered ratably.

the ordinary course of the taxpayer's

receive a payment from the sale.

Pledge Rule

trade or business. However, gain on

Complete Part III for the 2 years after the

some dispositions by dealers in real

year of sale unless you received the final

For certain dispositions under the

property or farmers who dispose of any

payment during the tax year.

installment method, if an installment

property used or produced in the trade

obligation is pledged as security on a

Special Rules

or business of farming may be reported

debt, the net proceeds of the secured

on the installment method.

debt are treated as payment on the

Interest

installment obligation. However, the

Don’t file Form 6252 for sales that

If any part of an installment payment you

amount treated as payment can’t be

don’t result in a gain, even if you will

received is for interest or original issue

more than the excess of the total

receive a payment in a tax year after the

discount, report that income on the

installment contract price over any

year of sale. Instead, report the entire

appropriate form or schedule. Don’t

payments received under the contract

sale on Form 4797, Sales of Business

report interest received, carrying charges

before the secured debt was obtained.

Property, Form 8949, Sales and Other

received, or unstated interest on Form

Dispositions of Capital Assets, or the

An installment obligation is pledged as

6252. See Pub. 537, Installment Sales,

Schedule D for your tax return,

security on a debt to the extent that

for details on unstated interest.

whichever applies.

payment of principal and interest on the

Installment Sales to Related Party

debt is directly secured by an interest in

Don’t file Form 6252 to report sales

the installment obligation. For sales after

during the tax year of stock or securities

A special rule applies to a first

December 16, 1999, payment on a debt

traded on an established securities

disposition (sale or exchange) of

is treated as directly secured by an

market. Instead, treat all payments as

property under the installment method to

interest in an installment obligation to the

received during the year of sale.

a related party who then makes a

extent an arrangement allows you to

second disposition (sale, exchange, gift,

Don’t file Form 6252 if you elect not to

satisfy all or part of the debt with the

or cancellation of installment note)

report the sale on the installment

installment obligation.

before making all payments on the first

method. To elect out, report the full

The pledge rule applies to any

disposition. For this purpose, a related

amount of the gain on a timely filed

installment sale after 1988 with a sales

party includes your spouse, child,

return (including extensions) on Form

price of over $150,000 except:

grandchild, parent, brother, sister, or a

4797, Form 8949, or the Schedule D for

related corporation, S corporation,

your tax return, whichever applies. If you

• Personal use property disposed of by

partnership, estate, or trust. See section

filed your original return on time without

an individual,

453(f)(1) for more details.

making the election, you can make the

• Farm property, and

election on an amended return filed no

Under this rule, treat part or all of the

• Timeshares and residential lots.

later than 6 months after the due date of

amount the related party realized (or the

your tax return, excluding extensions.

However, the pledge rule doesn’t

fair market value (FMV) if the disposed

Write “Filed pursuant to section

apply to pledges made after December

property isn’t sold or exchanged) from

301.9100-2” at the top of the amended

17, 1987, if the debt is incurred to

the second disposition as if you received

return.

refinance the principal amount of a debt

it from the first disposition at the time of

that was outstanding on December 17,

the second disposition. Figure the gain,

Which Parts To Complete

1987, and was secured by nondealer

if any, on lines 30 through 37. This rule

installment obligations on that date and

doesn’t apply if any of the conditions

Year of Sale

at all times after that date until the

listed on line 29 are met.

Complete lines 1 through 4, Part I, and

refinancing. This exception doesn’t apply

Part II. If you sold property to a related

to the extent that the principal amount of

party during the year, also complete

the debt resulting from the refinancing

Part III.

exceeds the principal amount of the

Form 6252 - Installment Sale Income - 2017 Page 2

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