6252 Installment Sale Income

Form

6252

Department of the Treasury
Internal Revenue Service

©

7
8
9
10
11
12
13
14
15
16
17
18

/
Yes

No

Yes

No

Gross Profit and Contract Price. Complete this part for the year of sale only.
5

Add lines 10, 11, and 12
Subtract line 13 from line 5. If zero or less, do not complete the rest of this form (see instructions)
If the property described on line 1 above was your main home, enter the amount of your excluded
gain (see instructions). Otherwise, enter -0Gross profit. Subtract line 15 from line 14
Subtract line 13 from line 6. If zero or less, enter -0Contract price. Add line 7 and line 17

13
14
15
16
17
18

Installment Sale Income. Complete this part for the year of sale and any year you receive a payment or
have certain debts you must treat as a payment on installment obligations.

19

Gross profit percentage (expressed as a decimal amount). Divide line 16 by line 18. For years
after the year of sale, see instructions

20
21
22
23

If this is the year of sale, enter the amount from line 17. Otherwise, enter -0Payments received during year (see instructions). Do not include interest, whether stated or unstated
Add lines 20 and 21
Payments received in prior years (see instructions). Do not include
23
interest, whether stated or unstated

24
25
26

Installment sale income. Multiply line 22 by line 19
Enter the part of line 24 that is ordinary income under the recapture rules (see instructions)
Subtract line 25 from line 24. Enter here and on Schedule D or Form 4797 (see instructions)

Part III

79

Identifying number

Selling price including mortgages and other debts. Do not include interest whether stated or unstated
Mortgages, debts, and other liabilities the buyer assumed or took
6
the property subject to (see instructions)
7
Subtract line 6 from line 5
8
Cost or other basis of property sold
9
Depreciation allowed or allowable
10
Adjusted basis. Subtract line 9 from line 8
11
Commissions and other expenses of sale
12
Income recapture from Form 4797, Part III (see instructions)

Part II

19
20
21
22

24
25
26

Related Party Installment Sale Income. Do not complete if you received the final payment this tax year.

27

Name, address, and taxpayer identifying number of related party

28
29

Did the related party resell or dispose of the property (“second disposition”) during this tax year?

Yes

No

If the answer to question 28 is “Yes,” complete lines 30 through 37 below unless one of the following conditions is met. Check the box that applies.

a
b
c
d
e
30
31
32
33
34
35
36
37

Attachment
Sequence No.

Description of property ©
/
/
/
Date acquired (month, day, year) ©
b Date sold (month, day, year) ©
Was the property sold to a related party (see instructions) after May 14, 1980? If “No,” skip line 4
Was the property you sold to a related party a marketable security? If “Yes,” complete Part III. If “No,”
complete Part III for the year of sale and the 2 years after the year of sale

Part I
5
6

2008

© Attach to your tax return.
Use a separate form for each sale or other disposition of
property on the installment method.

Name(s) shown on return

1
2a
3
4

OMB No. 1545-0228

Installment Sale Income

The second disposition was more than 2 years after the first disposition (other than dispositions
/
/
of marketable securities). If this box is checked, enter the date of disposition (month, day, year) ©
The first disposition was a sale or exchange of stock to the issuing corporation.
The second disposition was an involuntary conversion and the threat of conversion occurred after the first disposition.
The second disposition occurred after the death of the original seller or buyer.
It can be established to the satisfaction of the Internal Revenue Service that tax avoidance was not a principal purpose
for either of the dispositions. If this box is checked, attach an explanation (see instructions).
30
Selling price of property sold by related party (see instructions)
31
Enter contract price from line 18 for year of first sale
32
Enter the smaller of line 30 or line 31
33
Total payments received by the end of your 2008 tax year (see instructions)
34
Subtract line 33 from line 32. If zero or less, enter -035
Multiply line 34 by the gross profit percentage on line 19 for year of first sale
36
Enter the part of line 35 that is ordinary income under the recapture rules (see instructions)
Subtract line 36 from line 35. Enter here and on Schedule D or Form 4797 (see instructions)
37

For Paperwork Reduction Act Notice, see page 4.

Cat. No. 13601R

Form

6252

(2008)

Form 6252 (2008)

General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.

Purpose of Form
Generally, use Form 6252 to report
income from casual sales during this tax
year of real or personal property (other
than inventory) if you will receive any
payments in a tax year after the year of
sale. For years after the year of an
installment sale, see Which Parts To
Complete below.
Do not file Form 6252 for sales that
do not result in a gain, even if you will
receive a payment in a tax year after the
year of sale. Instead, report the entire
sale on Form 4797, Sales of Business
Property, or the Schedule D for your tax
return, whichever applies.
Do not file Form 6252 to report sales
during the tax year of stock or securities
traded on an established securities
market. Instead, treat all payments as
received during this tax year.
Do not file Form 6252 if you elect not
to report the sale on the installment
method. To elect out, report the full
amount of the gain on a timely filed
return (including extensions) on Form
4797 or the Schedule D for your tax
return, whichever applies. If you filed your
original return on time without making the
election, you can make the election on an
amended return filed no later than 6
months after the due date of your tax
return, excluding extensions. Write “Filed
pursuant to section 301.9100-2” at the
top of the amended return.

Which Parts To Complete
Year of Sale
Complete lines 1 through 4, Part I, and
Part II. If you sold property to a related
party during the year, also complete
Part III.

Later Years
Complete lines 1 through 4 and Part II
for any year in which you receive a
payment from an installment sale.
If you sold a marketable security to a
related party after May 14, 1980, and
before January 1, 1987, complete Form
6252 for each year of the installment
agreement, even if you did not receive a
payment. Complete lines 1 through 4.
Complete Part II for any year in which
you receive a payment from the sale.
Complete Part III unless you received
the final payment during the tax year.
After December 31, 1986, the
installment method is not available for
the sale of marketable securities.

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If you sold property other than a
marketable security to a related party
after May 14, 1980, complete Form 6252
for the year of sale and for 2 years after
the year of sale, even if you did not
receive a payment. Complete lines 1
through 4. Complete Part II for any year
during this 2-year period in which you
receive a payment from the sale.
Complete Part III for the 2 years after
the year of sale unless you received the
final payment during the tax year.

Special Rules
Interest
If any part of an installment payment you
received is for interest or original issue
discount, report that income on the
appropriate form or schedule. Do not
report interest received, carrying charges
received, or unstated interest on Form
6252. See Pub. 537, Installment Sales,
for details on unstated interest.

Installment Sales to Related Party
A special rule applies to a first disposition
(sale or exchange) of property under the
installment method to a related party who
then makes a second disposition (sale,
exchange, gift, or cancellation of
installment note) before making all
payments on the first disposition. For this
purpose, a related party includes your
spouse, child, grandchild, parent,
brother, sister, or a related corporation,
S corporation, partnership, estate, or
trust. See section 453(f)(1) for more
details.
Under this rule, treat part or all of the
amount the related party realized (or the
fair market value (FMV) if the disposed
property is not sold or exchanged) from
the second disposition as if you received
it from the first disposition at the time of
the second disposition. Figure the gain, if
any, on lines 30 through 37. This rule
does not apply if any of the conditions
listed on line 29 are met.

Sale of Depreciable Property to
Related Person
Generally, if you sell depreciable property
to a related person (as defined in section
453(g)(3)), you cannot report the sale using
the installment method. For this purpose,
depreciable property is any property that
can be depreciated by a person or entity to
whom you transfer it. However, you can
use the installment method if you can
show to the satisfaction of the IRS that
avoidance of federal income taxes was not
one of the principal purposes of the sale
(for example, no significant tax deferral
benefits will result from the sale). If the
installment method does not apply, report
the sale on Schedule D or Form 4797,

2

whichever applies. Treat all payments you
will receive as if they were received in the
year of sale. Use FMV for any payment that
is contingent as to amount. If the FMV
cannot be readily determined, basis is
recovered ratably.

Pledge Rule
For certain dispositions under the
installment method, if an installment
obligation is pledged as security on a
debt, the net proceeds of the secured
debt are treated as payment on the
installment obligation. However, the
amount treated as payment cannot be
more than the excess of the total
installment contract price over any
payments received under the contract
before the secured debt was obtained.
An installment obligation is pledged as
security on a debt to the extent that
payment of principal and interest on the
debt is directly secured by an interest in
the installment obligation. For sales after
December 16, 1999, payment on a debt
is treated as directly secured by an
interest in an installment obligation to the
extent an arrangement allows you to
satisfy all or part of the debt with the
installment obligation.
The pledge rule applies to any
installment sale after 1988 with a sales
price of over $150,000 except:
● Personal use property disposed of by
an individual,
● Farm property, and
● Timeshares and residential lots.
However, the pledge rule does not apply
to pledges made after December 17, 1987,
if the debt is incurred to refinance the
principal amount of a debt that was
outstanding on December 17, 1987, and
was secured by nondealer real property
installment obligations on that date and at
all times after that date until the refinancing.
This exception does not apply to the extent
that the principal amount of the debt
resulting from the refinancing exceeds the
principal amount of the refinanced debt
immediately before the refinancing. Also,
the pledge rule does not affect refinancing
due to the calling of a debt by the creditor if
the debt is then refinanced by a person
other than this creditor or someone related
to the creditor.

Interest on Deferred Tax
Generally, you must pay interest on the
deferred tax related to any obligation
that arises during a tax year from the
disposition of property under the
installment method if:
● The property had a sales price over
$150,000, and

Page

Form 6252 (2008)

● The aggregate balance of all
nondealer installment obligations arising
during, and outstanding at the close of,
the tax year is more than $5 million.
You must pay interest in subsequent
years if installment obligations that
originally required interest to be paid are
still outstanding at the close of a tax year.
The interest rules do not apply to
dispositions of:
● Farm property,
● Personal use property by an individual,
● Real property before 1988, or
● Personal property before 1989.
See IRC 453(l) for more information on
the sale of timeshares and residential
lots under the installment method.
How to report the interest. The interest
is not figured on Form 6252. See Pub.
537, Installment Sales, for details on
how to report the interest.

Additional Information
See Pub. 537 for additional information,
including details about reductions in
selling price, the single sale of several
assets, like-kind exchanges, dispositions
of installment obligations, and
repossessions.

Specific Instructions
Part I—Gross Profit and
Contract Price
Line 5
Enter the total of any money, face amount
of the installment obligation, and the FMV
of other property that you received or will
receive in exchange for the property sold.
Include on line 5 any existing mortgage or
other debt the buyer assumed or took the
property subject to. Do not include stated
interest, unstated interest, any amount
recomputed or recharacterized as interest,
or original issue discount.
If there is no stated maximum selling
price, such as in a contingent payment
sale, attach a schedule showing the
computation of gain. Enter the taxable part
of the payment on line 24 and also on line
35 if Part III applies. See Temporary
Regulations section 15A.453-1.

Line 6
Enter only mortgages or other debts the
buyer assumed from the seller or took
the property subject to. Do not include
new mortgages the buyer gets from a
bank, the seller, or other sources.

Line 8
Enter the original cost and other
expenses you incurred in buying the
property. Add the cost of improvements,
etc., and subtract any diesel-powered
highway vehicle, enhanced oil recovery,

3

disabled access, new markets, or
employer-provided child care credit or
casualty losses previously allowed. For
details, see Pub. 551, Basis of Assets.

Part II—Installment Sale
Income

Line 9

Enter the gross profit percentage
(expressed as a decimal amount)
determined for the year of sale even if
you did not file Form 6252 for that year.

Enter all depreciation or amortization you
deducted or were allowed to deduct
from the date of purchase until the date
of sale. Add any section 179 expense
deduction; the commercial revitalization
deduction; the basis reduction to
investment credit property; the
deduction for qualified clean-fuel vehicle
property or refueling property;
deductions claimed under section 190,
193, or 1253(d)(2) or (3) (as in effect
before the enactment of P.L. 103-66);
and the basis reduction for the qualified
electric vehicle credit. Subtract any
recapture of basis reduction to
investment credit property; any section
179 or 280F recapture amount included
in gross income in a prior tax year; any
qualified clean-fuel vehicle property or
refueling property deduction you were
required to recapture because the
property ceased to be eligible for the
deduction; any recapture of the
employer-provided child care facilities
and services credit; and any basis
increase for qualified electric vehicle
recapture.

Line 11
Enter sales commissions, advertising
expenses, attorney and legal fees, etc.,
incurred to sell the property.

Line 12
Any ordinary income recapture under
section 1245 or 1250 (including sections
179 and 291) is fully taxable in the year
of sale even if no payments were
received. To figure the recapture
amount, complete Form 4797, Part III.
The ordinary income recapture is the
amount on line 31 of Form 4797. Enter
it on line 12 of Form 6252 and also on
line 13 of Form 4797. Do not enter any
gain for this property on line 32 of Form
4797. If you used Form 4797 only to
figure the recapture amount on line 12
of Form 6252, enter “N/A” on line 32
of Form 4797. Partnerships and
S corporations and their partners and
shareholders, see the Instructions for
Form 4797.

Line 14
Do not file Form 6252 if line 14 is zero or
less. Instead, report the entire sale on
Form 4797 or the Schedule D for your
tax return.

Line 15
If the property described on line 1 was
your main home, you may be able to
exclude part or all of your gain. See
Pub. 523, Selling Your Home, for details.

Line 19

Line 21
Enter all money and the FMV of any
property you received in 2008. Include
as payments any amount withheld to
pay off a mortgage or other debt or to
pay broker and legal fees. Generally, do
not include as a payment the buyer’s
note, a mortgage, or other debt
assumed by the buyer. However, a note
or other debt that is payable on demand
or readily tradable in an established
securities market is considered a
payment. For sales occurring before
October 22, 2004, a note or other debt
is considered a payment only if it was
issued by a corporation or governmental
entity. If you did not receive any
payments in 2008, enter zero. If in prior
years an amount was entered on the
equivalent of line 32 of the 2008 form,
do not include it on this line. Instead,
enter it on line 23. See Pledge Rule on
page 2 for details about proceeds of
debt secured by installment obligations
that must be treated as payments on
installment obligations.

Line 23
Enter all money and the FMV of property
you received before 2008 from the sale.
Include allocable installment income and
any other deemed payments from prior
years.
Deemed payments include amounts
deemed received because of:
● A second disposition by a related
party, or
● The pledge rule of section 453A(d).

Line 25
Enter here and on Form 4797, line 15,
any ordinary income recapture on section
1252, 1254, or 1255 property for the year
of sale or all remaining recapture from a
prior year sale. Do not enter ordinary
income from a section 179 expense
deduction. If this is the year of sale,
complete Form 4797, Part III. The amount
from line 27c, 28b, or 29b of Form 4797
is the ordinary income recapture. Do not
enter any gain for this property on line 31
or 32 of Form 4797. If you used Form
4797 only to figure the recapture on line
25 or 36 of Form 6252, enter “N/A” on
lines 31 and 32 of Form 4797.
Also report on this line any ordinary
income recapture remaining from prior
years on section 1245 or 1250 property
sold before June 7, 1984.

Page

Form 6252 (2008)

Do not enter on line 25 more than the
amount shown on line 24. Any excess
must be reported in future years on
Form 6252 up to the taxable part of the
installment sale until all of the recapture
has been reported.

Line 26
For trade or business property held
more than 1 year, enter this amount on
Form 4797, line 4. If the property was
held 1 year or less or you have an
ordinary gain from the sale of a
noncapital asset (even if the holding
period is more than 1 year), enter this
amount on Form 4797, line 10, and write
“From Form 6252.” If the property was
section 1250 property (generally, real
property that you depreciated) held more
than 1 year, figure the total amount of
unrecaptured section 1250 gain included
on line 26 using the Unrecaptured
Section 1250 Gain Worksheet in the
Instructions for Schedule D (Form 1040).
For capital assets, enter this amount
on Schedule D as a short- or long-term
gain on the lines identified as from Form
6252.

Part III—Related Party
Installment Sale Income
Line 29
If one of the conditions is met, check the
appropriate box and skip lines 30
through 37. If you checked box 29e,
attach an explanation. Generally, the
nontax avoidance exception will apply to
the second disposition if:
● The disposition was involuntary (for
example, a creditor of the related party
foreclosed on the property or the related
party declared bankruptcy), or

● The disposition was an installment sale
under which the terms of payment were
substantially equal to or longer than those
for the first sale. However, the resale
terms must not permit significant deferral
of recognition of gain from the first sale
(for example, amounts from the resale are
being collected sooner).

Line 30
If the related party sold all or part of the
property from the original sale in 2008,
enter the amount realized from the part
resold. If part was sold in an earlier year
and part was sold this year, enter the
cumulative amount realized from the
resale.
Amount realized. The amount realized
from a sale or exchange is the total of all
money received plus the FMV of all
property or services received. The
amount realized also includes any
liabilities that were assumed by the buyer
and any liabilities to which the property
transferred is subject, such as real estate
taxes or a mortgage. For details, see
Pub. 544.

Line 33
If you completed Part II, enter the sum of
lines 22 and 23. Otherwise, enter all
money and the FMV of property you
received before 2008 from the sale.
Include allocable installment income and
any other deemed payments from prior
years. Do not include interest, whether
stated or unstated.

Line 36
See the instructions for line 25. Do not
enter on line 36 more than the amount
shown on line 35. Any excess must be
reported in future years on Form 6252 up
to the taxable part of the installment sale
until all of the recapture has been
reported.

4

Line 37
See the instructions for line 26.
Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of
the United States. You are required to
give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must
be retained as long as their contents
may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by section 6103.
The time needed to complete and file
this form will vary depending on
individual circumstances. The estimated
burden for individual taxpayers filing this
form is approved under OMB control
number 1545-0074 and is included in
the estimates shown in the instructions
for their individual income tax return. The
estimated burden for all other taxpayers
who file this form is shown below.
Recordkeeping
1 hr., 18 min.
Learning about the law
or the form
24 min.
Preparing the form
1 hr.
Copying, assembling, and
sending the form
to the IRS
20 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you.
See the instructions for the tax return
with which this form is filed.