Fillable Form 6252 - Installment Sale Income

Form 6252 (2014)

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 cannot report

If you sold a marketable security to a

the sale using the installment method.

related party after May 14, 1980, and

For the latest information about

For 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 did not 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

payment from the sale. Complete Part III

Purpose of Form

the satisfaction of the IRS that avoidance

unless you received the final payment

of federal income taxes was not one of

Use Form 6252 to report income from an

during the tax year.

installment sale on the installment

the principal purposes of the sale (for

After 1986, the installment method is

method. Generally, an installment sale is

example, no significant tax deferral

not 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 does not apply,

If you sold property other than a

the tax year in which the disposition

report the sale on Form 4797, Form

marketable security to a related party

occurs. Ordinarily, an installment sale

8949, or Schedule D, whichever applies.

after May 14, 1980, complete Form 6252

does not include a disposition of

Treat all payments you will receive as if

for the year of sale and for 2 years after

personal property by a person who

they were received in the year of sale.

the year of sale, even if you did not

regularly sells or otherwise disposes of

Use FMV for any payment that is

receive a payment. Complete lines 1

personal property of the same type, or a

contingent as to amount. If the FMV

through 4. Complete Part II for any year

disposition of real property which is held

cannot be readily determined, basis is

during this 2-year period in which you

by the taxpayer for sale to customers in

recovered ratably.

receive a payment from the sale.

the ordinary course of the taxpayer's

Pledge Rule

Complete Part III for the 2 years after the

trade or business. However, gain on

year of sale unless you received the final

For certain dispositions under the

some dispositions by dealers in real

payment during the tax year.

property or farmers who dispose of any

installment method, if an installment

property used or produced in the trade

obligation is pledged as security on a

Special Rules

debt, the net proceeds of the secured

or business of farming may be reported

debt are treated as payment on the

on the installment method.

Interest

installment obligation. However, the

Do not file Form 6252 for sales that do

If any part of an installment payment you

amount treated as payment cannot be

not 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. Do not

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

An installment obligation is pledged as

Dispositions of Capital Assets, or the

6252. See Pub. 537, Installment Sales,

security on a debt to the extent that

Schedule D for your tax return,

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

Do not 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 this tax year.

a related party who then makes a

extent an arrangement allows you to

second disposition (sale, exchange, gift,

Do not 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 method.

installment obligation.

before making all payments on the first

To elect out, report the full amount of the

The pledge rule applies to any

disposition. For this purpose, a related

gain on a timely filed return (including

installment sale after 1988 with a sales

party includes your spouse, child,

extensions) on Form 4797, Form 8949, or

price of over $150,000 except:

grandchild, parent, brother, sister, or a

the Schedule D for your tax return,

related corporation, S corporation,

• Personal use property disposed of by

whichever applies. If you filed your

partnership, estate, or trust. See section

an individual,

original return on time without making the

453(f)(1) for more details.

election, you can make the election on an

• Farm property, and

amended return filed no later than 6

Under this rule, treat part or all of the

• Timeshares and residential lots.

months after the due date of your tax

amount the related party realized (or the

However, the pledge rule does not

return, excluding extensions. Write “Filed

fair market value (FMV) if the disposed

apply to pledges made after December

pursuant to section 301.9100-2” at the

property is not sold or exchanged) from

17, 1987, if the debt is incurred to

top of the amended return.

the second disposition as if you received

refinance the principal amount of a debt

it from the first disposition at the time of

Which Parts To Complete

that was outstanding on December 17,

the second disposition. Figure the gain,

1987, and was secured by nondealer

if any, on lines 30 through 37. This rule

Year of Sale

installment obligations on that date and

does not apply if any of the conditions

at all times after that date until the

Complete lines 1 through 4, Part I, and Part

listed on line 29 are met.

refinancing. This exception does not

II. If you sold property to a related party

during the year, also complete Part III.

apply to the extent that the principal

amount of the debt resulting from the

refinancing exceeds the principal

Form 6252 - Installment Sale Income - 2014 Page 2

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