Before you start:
- Beginning in tax year 2019, the 6252 part 1 needs to be completed for each year the installment agreement is active. This will calculate the gain for the tax return.
- Sales of building and land are typically treated as two sales. If both sales don't qualify for installment agreement reporting, you must use separate asset entry worksheets.
- The 6252 can only be used for sales that result in a gain, even if payment arrangements are made.
To create a new installment agreement:
- From the Forms menu, select Open Forms.
- Select the 6252 from the list and click OK.
- Complete the General Information Smart Worksheet.
- Open the Asset Entry Worksheet for the property involved in the installment sale.
- Scroll down to the Dispositions section and enter the sale information.
- Double-click in the field Double-click to link sale to Form 6252 and choose the 6252 you created in step 3.
- Repeat steps 4-6 for any additional assets involved in the sale.
- Open the 6252 and complete the Payments Received Smart Worksheet.
If more than two assets are linked to a single Form 6252 and you are e-filing you'll need to override the Date Acquired and disable the e-file error checking before transmitting the return.
How is the Repossession of Installment Sale Property reported?
ProSeries does not have a worksheet to calculate the repossession amounts for you. If the taxpayer/spouse repossess the property after making an installment sale, you must figure the following amounts:
- Your gain (or loss) on the repossession.
- Your basis in the repossessed property
The rules for figuring these amounts depend on the kind of property you repossess. The rules for repossessions of personal property differ from those for real property. Special rules may apply if you repossess property that was your main home before the sale.
Refer to IRS Publication 537 for more details.