Pa Schedule D-1 (Form Rev-1689 Ex) - Calculation Of Installment Sale Income Page 2
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2REV-1689 EX (05-13)
FOR USE BY INDIVIDUALS, ESTATES AND TRUSTS,
PA S CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS
INSTRUCTIONS
General Instructions
Use PA Schedule D-1 if you elect the installment sale method to report gain from a sale of real or tangible personal property. If you sell property
in the regular and ordinary course of business on the installment method, such as inventory, report such activity on your PA Schedule C or F.
You may not report a loss on an installment method.
The installment sale method is not permitted for sales of intangible personal property, or transactions for the purpose of lending money or
rendering services.
An installment sale election is irrevocable. If you cannot or do not elect to report a sale by the installment method, complete PA Schedule D,
reporting the entire gain received from the sale.
If you acquired the property prior to June 1, 1971, obtain PA Schedule D-71, REV-1742, “Gain or Loss on Property Acquired Prior to June 1,
1971” to first determine the taxable gain.
Line-By-Line Instructions
Line 1. Gross sales price. Enter the total amount of money, the face amount of the installment obligation, and the fair market value of other
property (such as the buyer’s note), that you received or will receive in exchange for the property you are selling. Include on Line 1
any existing mortgage or other debt on the property the buyer assumes. Do not include interest.
Line 2. Mortgage and other indebtedness. Enter only mortgages or other indebtedness on the property the buyer assumes from the seller.
Do not include new mortgages the buyer gets from a bank, the seller, or other source.
Line 4. Cost or other basis of property sold. Enter the original cost or basis and all expenses you incurred in buying the property. Add
capital improvements, but not repairs, to your basis. If the property was acquired prior to June 1, 1971, use the adjusted or alternative
basis as determined for Column e on PA Schedule D-71.
Line 5. Depreciation allowed or allowable. Enter all depreciation or amortization you deducted or should have deducted from the date of
purchase until the date of sale. PA PIT law limits IRC section 179 current expensing to the expensing allowed at the time you placed
the asset into service or the expensing in effect under the IRC of 1986. The maximum available Section 179 expense is $25,000.
PA PIT law also does not permit the bonus depreciation elections. For each asset, you must also report straight-line depreciation,
unless not using an optional accelerated depreciation method. You need the amount of straight-line depreciation if you need to take
advantage of Pennsylvania’s Tax Benefit Rule when you sell the asset. See the PA PIT Guide for the Tax Benefit Rule. If the property
was acquired prior to June 1, 1971 and you are using the alternative basis of the property, include only depreciation or amortization
after June 1, 1971.
Line 7. Commissions and other expenses of sale. Enter sales commissions, advertising expenses, attorney and legal fees, transfer taxes,
or other expenses you incurred in selling the property.
Line 9. Gain or loss from sale. Subtract Line 8 from Line 1. If the result is zero or less, do not complete the rest of this form. Report the
entire sale on a PA Schedule D or other appropriate schedule, and submit it with your PA tax return.
Line 12. Express the proportional gain ratio by a fraction or by a decimal carried to at least three places. NOTE: If the mortgage the
buyer assumes (Line 2) is equal to or greater than the seller’s basis in the property (Line 8), the proportional gain ratio will always
be 1.000.
Line 14. Payments received during the year. Enter all money you received and the fair market value of any property you received during
the taxable year. Include as payments any amount withheld to pay off a mortgage or other debt, such as brokers’ and legal fees. Do not
include the buyer’s note, or any mortgage or other liability assumed by the buyer. If you did not receive any payments in the taxable
year, enter zero.
Line 16. Payments received in prior years. Enter all money and the fair market value of property you received and reported in prior years
from this installment sale. Only include payments for sales reported to Pennsylvania using the installment method of reporting.
Line 17. Taxable part of installment sale. Enter result here and on the appropriate schedule for your tax return.
Line 18. Net interest income. Enter the total interest you received during the year, less the interest expense you incurred during the
year, on the property sold. If the expense is more than the income, enter the loss and fill in the oval.
Line 19. Taxable Gain. Add Lines 17 and 18.
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