Fillable Form 6252 - Installment Sale Income

Form 6252 (2012)

Page

What's New

If you sold a marketable security to a

any property that (in the hands of the

related party after May 14, 1980, and

person or entity to whom you transfer it)

The IRS has created a page on IRS.gov

before January 1, 1987, complete Form

is subject to the allowance for

for information about Form 6252 and its

6252 for each year of the installment

depreciation. However, you can use the

instructions, at

agreement, even if you did not receive a

installment method if you can show to

Future developments affecting Form

payment. Complete lines 1 through 4.

the satisfaction of the IRS that avoidance

6252 (such as legislation enacted after

Complete Part II for any year in which

of federal income taxes was not one of

we release the form) will be posted on

you receive a payment from the sale.

the principal purposes of the sale (for

that page.

Complete Part III unless you received the

example, no significant tax deferral

final payment during the tax year.

benefits will result from the sale). If the

General Instructions

installment method does not apply,

After December 31, 1986, the

report the sale on Form 4797, Form

Section references are to the Internal

installment method is not available for

8949, or Schedule D, whichever applies.

Revenue Code unless otherwise noted.

the sale of marketable securities.

Treat all payments you will receive as if

If you sold property other than a

Purpose of Form

they were received in the year of sale.

marketable security to a related party

Use FMV for any payment that is

Generally, use Form 6252 to report

after May 14, 1980, complete Form 6252

contingent as to amount. If the FMV

income from casual sales during this tax

for the year of sale and for 2 years after

cannot be readily determined, basis is

year of real or personal property (other

the year of sale, even if you did not

recovered ratably.

than inventory) if you will receive any

receive a payment. Complete lines 1

Pledge Rule

payments in a tax year after the year of

through 4. Complete Part II for any year

sale. For years after the year of an

during this 2-year period in which you

For certain dispositions under the

installment sale, see Which Parts To

receive a payment from the sale.

installment method, if an installment

Complete below.

Complete Part III for the 2 years after the

obligation is pledged as security on a

year of sale unless you received the final

Do not file Form 6252 for sales that do

debt, the net proceeds of the secured

payment during the tax year.

not result in a gain, even if you will

debt are treated as payment on the

receive a payment in a tax year after the

installment obligation. However, the

Special Rules

year of sale. Instead, report the entire

amount treated as payment cannot be

sale on Form 4797, Sales of Business

more than the excess of the total

Interest

Property, Form 8949, Sales and Other

installment contract price over any

If any part of an installment payment you

Dispositions of Capital Assets, or the

payments received under the contract

received is for interest or original issue

Schedule D for your tax return,

before the secured debt was obtained.

discount, report that income on the

whichever applies.

An installment obligation is pledged as

appropriate form or schedule. Do not

Do not file Form 6252 to report sales

security on a debt to the extent that

report interest received, carrying charges

during the tax year of stock or securities

payment of principal and interest on the

received, or unstated interest on Form

traded on an established securities

debt is directly secured by an interest in

6252. See Pub. 537, Installment Sales,

market. Instead, treat all payments as

the installment obligation. For sales after

for details on unstated interest.

received during this tax year.

December 16, 1999, payment on a debt

Installment Sales to Related Party

is treated as directly secured by an

Do not file Form 6252 if you elect not to

interest in an installment obligation to the

A special rule applies to a first

report the sale on the installment method.

extent an arrangement allows you to

To elect out, report the full amount of the

disposition (sale or exchange) of

satisfy all or part of the debt with the

gain on a timely filed return (including

property under the installment method to

installment obligation.

extensions) on Form 4797, Form 8949, or

a related party who then makes a

the Schedule D for your tax return,

second disposition (sale, exchange, gift,

The pledge rule applies to any

or cancellation of installment note)

whichever applies. If you filed your

installment sale after 1988 with a sales

original return on time without making the

before making all payments on the first

price of over $150,000 except:

election, you can make the election on an

disposition. For this purpose, a related

• Personal use property disposed of by

amended return filed no later than 6

party includes your spouse, child,

an individual,

months after the due date of your tax

grandchild, parent, brother, sister, or a

• Farm property, and

return, excluding extensions. Write “Filed

related corporation, S corporation,

partnership, estate, or trust. See section

• Timeshares and residential lots.

pursuant to section 301.9100-2” at the

top of the amended return.

453(f)(1) for more details.

However, the pledge rule does not

Under this rule, treat part or all of the

apply to pledges made after December

Which Parts To Complete

amount the related party realized (or the

17, 1987, if the debt is incurred to

fair market value (FMV) if the disposed

refinance the principal amount of a debt

Year of Sale

property is not sold or exchanged) from

that was outstanding on December 17,

Complete lines 1 through 4, Part I, and Part

the second disposition as if you received

1987, and was secured by nondealer

II. If you sold property to a related party

it from the first disposition at the time of

installment obligations on that date and

during the year, also complete Part III.

the second disposition. Figure the gain,

at all times after that date until the

if any, on lines 30 through 37. This rule

refinancing. This exception does not

Later Years

does not apply if any of the conditions

apply to the extent that the principal

Complete lines 1 through 4 and Part II

listed on line 29 are met.

amount of the debt resulting from the

for any year in which you receive a

refinancing exceeds the principal

Sale of Depreciable Property to

payment from an installment sale.

amount of the refinanced debt

Related Person

immediately before the refinancing. Also,

the pledge rule does not affect

Generally, if you sell depreciable

refinancing due to the calling of a debt

property to a related person (as defined

by the creditor if the debt is then

in section 453(g)(3)), you cannot report

refinanced by a person other than this

the sale using the installment method.

creditor or someone related to the

For this purpose, depreciable property is

creditor.

Form 6252 - Installment Sale Income - 2012 Page 2

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