Do I have to pay tax on my installment sale?
|
| An installment sale is a sale of property at a gain where at least one
payment is to be received in a later tax year. You may be required to report the sale as an
installment sale on your tax return unless you "elect out" of such treatment in the
tax year of the installment sale. If you elect out of the
installment sale tax treatment method on your tax return all of the taxable gain is taxable income in the
tax year of the installment sale. However,
because you are not deferring the tax you may pay more tax on your tax
return by electing out of installment sale tax treatment method. You cannot
defer a loss on your tax return under the installment sale method - nor can you use it to report a
taxable gain on your tax return from
the sale of inventory, or securities publicly traded on a securities exchange or market. If
you treat the installment sale transaction as an installment sale for tax
purposes on your tax return you will include in taxable income only a
proportionate amount of the gain, plus the interest, that you receive, or are considered
to have received, each tax year.
Use Form 6252, Installment
Sale Income to compute taxable income on your tax return each tax year. You may need to attach
Form 4797, Sales of Business
Property to your tax return.
|
 |
 |
Related tax
information about an installment sale |
|
|
How do I report installment sale
interest on my IRS tax return?
Income Related Questions and Answers |
|
IRS publications about an installment sale:
For additional tax information about an installment sale see
IRS Publication 537, Installment
Sales. Also see
IRS Publication 17,
Your Federal Income Tax. |
|
 |
|
 |
Ask Julian Block your IRS and tax questions! |
|
|
 |
If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
|
|
|
