Fillable Form 6252 - Installment Sale Income

Form 6252 (2013)

Page

General Instructions

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)

Section references are to the Internal

before January 1, 1987, complete Form

is subject to the allowance for

Revenue Code unless otherwise noted.

6252 for each year of the installment

depreciation. However, you can use the

agreement, even if you did not receive a

installment method if you can show to

Future Developments

payment. Complete lines 1 through 4.

the satisfaction of the IRS that avoidance

Complete Part II for any year in which

of federal income taxes was not one of

For the latest information about

you receive a payment from the sale.

the principal purposes of the sale (for

developments related to Form 6252 and

Complete Part III unless you received the

example, no significant tax deferral

its instructions, such as legislation

final payment during the tax year.

benefits will result from the sale). If the

enacted after they were published, go to

installment method does not apply,

After December 31, 1986, the

report the sale on Form 4797, Form

installment method is not available for

Purpose of Form

8949, or Schedule D, whichever applies.

the sale of marketable securities.

Treat all payments you will receive as if

Generally, use Form 6252 to report

If you sold property other than a

they were received in the year of sale.

income from casual sales during this tax

marketable security to a related party

Use FMV for any payment that is

year of real or personal property (other

after May 14, 1980, complete Form 6252

contingent as to amount. If the FMV

than inventory) if you will receive any

for the year of sale and for 2 years after

cannot be readily determined, basis is

payments in a tax year after the year of

the year of sale, even if you did not

recovered ratably.

sale. For years after the year of an

receive a payment. Complete lines 1

Pledge Rule

installment sale, see Which Parts To

through 4. Complete Part II for any year

Complete below.

during this 2-year period in which you

For certain dispositions under the

receive a payment from the sale.

Do not file Form 6252 for sales that do

installment method, if an installment

Complete Part III for the 2 years after the

not result in a gain, even if you will

obligation is pledged as security on a

year of sale unless you received the final

receive a payment in a tax year after the

debt, the net proceeds of the secured

payment during the tax year.

year of sale. Instead, report the entire

debt are treated as payment on the

sale on Form 4797, Sales of Business

installment obligation. However, the

Special Rules

Property, Form 8949, Sales and Other

amount treated as payment cannot be

Dispositions of Capital Assets, or the

more than the excess of the total

Interest

Schedule D for your tax return,

installment contract price over any

If any part of an installment payment you

whichever applies.

payments received under the contract

received is for interest or original issue

before the secured debt was obtained.

Do not file Form 6252 to report sales

discount, report that income on the

during the tax year of stock or securities

An installment obligation is pledged as

appropriate form or schedule. Do not

traded on an established securities

security on a debt to the extent that

report interest received, carrying charges

market. Instead, treat all payments as

payment of principal and interest on the

received, or unstated interest on Form

received during this tax year.

debt is directly secured by an interest in

6252. See Pub. 537, Installment Sales,

the installment obligation. For sales after

Do not file Form 6252 if you elect not to

for details on unstated interest.

December 16, 1999, payment on a debt

report the sale on the installment method.

Installment Sales to Related Party

is treated as directly secured by an

To elect out, report the full amount of the

interest in an installment obligation to the

A special rule applies to a first

gain on a timely filed return (including

extent an arrangement allows you to

extensions) on Form 4797, Form 8949, or

disposition (sale or exchange) of

satisfy all or part of the debt with the

the Schedule D for your tax return,

property under the installment method to

installment obligation.

whichever applies. If you filed your

a related party who then makes a

original return on time without making the

second disposition (sale, exchange, gift,

The pledge rule applies to any

or cancellation of installment note)

election, you can make the election on an

installment sale after 1988 with a sales

amended return filed no later than 6

before making all payments on the first

price of over $150,000 except:

months after the due date of your tax

disposition. For this purpose, a related

• Personal use property disposed of by

return, excluding extensions. Write “Filed

party includes your spouse, child,

an individual,

pursuant to section 301.9100-2” at the

grandchild, parent, brother, sister, or a

• Farm property, and

top of the amended return.

related corporation, S corporation,

partnership, estate, or trust. See section

• Timeshares and residential lots.

Which Parts To Complete

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

Year of Sale

amount the related party realized (or the

17, 1987, if the debt is incurred to

Complete lines 1 through 4, Part I, and Part

fair market value (FMV) if the disposed

refinance the principal amount of a debt

II. If you sold property to a related party

property is not sold or exchanged) from

that was outstanding on December 17,

during the year, also complete Part III.

the second disposition as if you received

1987, and was secured by nondealer

it from the first disposition at the time of

installment obligations on that date and

Later Years

the second disposition. Figure the gain,

at all times after that date until the

Complete lines 1 through 4 and Part II

if any, on lines 30 through 37. This rule

refinancing. This exception does not

for any year in which you receive a

does not apply if any of the conditions

apply to the extent that the principal

payment from an installment sale.

listed on line 29 are met.

amount of the debt resulting from the

refinancing exceeds the principal

Sale of Depreciable Property to

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 - 2013 Page 2

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