Form 6252 Installment Sale Income

Form

6252

Department of the Treasury
Internal Revenue Service

Installment Sale Income
▶ Use

OMB No. 1545-0228

Description of property ▶
Date acquired (mm/dd/yyyy) ▶
b Date sold (mm/dd/yyyy) ▶
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

Gross Profit and Contract Price. Complete this part for the year of sale only.
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 the
property subject to (see instructions) . . . . . . . . . . .
6
Subtract line 6 from line 5 . . . . . . . . . . . . . . .
7
Cost or other basis of property sold . . . . . . . . . . .
8
Depreciation allowed or allowable . . . . . . . . . . . .
9
Adjusted basis. Subtract line 9 from line 8 . . . . . . . . .
10
Commissions and other expenses of sale . . . . . . . . .
11
Income recapture from Form 4797, Part III (see instructions) . . .
12
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 -0- . . . . . . . . . . . . . . . . . . .

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

Gross profit. Subtract line 15 from line 14 . . . .
Subtract line 13 from line 6. If zero or less, enter -0- .
Contract price. Add line 7 and line 17 . . . . .

Part II

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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 -0- . . . . . . . .
Payments 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
interest, whether stated or unstated . . . . . . . . . . .
23
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

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Yes

No

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Yes

No

5

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

24
25
26

Attachment
Sequence No. 79

Identifying number

Name(s) shown on return

1
2a
3
4

2012

▶ Attach to your tax return.
a separate form for each sale or other disposition of property on the installment method.
▶ Instructions and more are at www.IRS.gov/form6252.

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.
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 (mm/dd/yyyy) . . . . . ▶

b
c
d
e

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 IRS that tax avoidance was not a principal purpose for either of the
dispositions. If this box is checked, attach an explanation (see instructions).

30
31
32
33
34
35
36
37

a

Selling price of property sold by related party (see instructions) . . . . . . . . . .
Enter contract price from line 18 for year of first sale . . . . . . . . . . . . . .
Enter the smaller of line 30 or line 31 . . . . . . . . . . . . . . . . . . .
Total payments received by the end of your 2012 tax year (see instructions) . . . . . .
Subtract line 33 from line 32. If zero or less, enter -0- . . . . . . . . . . . . .
Multiply line 34 by the gross profit percentage on line 19 for year of first sale . . . . . .
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) .

For Paperwork Reduction Act Notice, see page 4.

Cat. No. 13601R

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Form 6252 (2012)

Page 2

Form 6252 (2012)

What's New
The IRS has created a page on IRS.gov
for information about Form 6252 and its
instructions, at www.irs.gov/form6252.
Future developments affecting Form
6252 (such as legislation enacted after
we release the form) will be posted on
that page.

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, Form 8949, Sales and Other
Dispositions of Capital Assets, 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, Form 8949, 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.
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 (in the hands of the
person or entity to whom you transfer it)
is subject to the allowance for
depreciation. 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 Form 4797, Form
8949, or Schedule D, 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
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.

Page 3

Form 6252 (2012)

Interest on Deferred Tax

Line 6

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
• 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 section 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 for details on how to report the
interest.

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.

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 or services
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 8
Enter the original cost and other
expenses you incurred in buying the
property. Add the cost of improvements,
etc., and subtract any casualty losses
and any of the following credits
previously allowed with respect to the
property.
• Nonbusiness energy property credit.
• Residential energy efficient property
credit.
• Adoption credit.
• District of Columbia first-time
homebuyer credit.
• Disabled access credit.
• New markets credit.
• Credit for employer-provided childcare
facilities and services.
• Energy efficient home credit.
• Alternative motor vehicle credit.
• Alternative fuel vehicle refueling
property credit.
• Qualified railroad track maintenance
credit.
• Enhanced oil recovery credit.
• Qualified plug-in electric drive motor
vehicle credit.
• Qualified plug-in electric vehicle credit.
• Qualified electric vehicle credit.
For additional information, see Pub.
551, Basis of Assets.

Subtract the following recapture
amounts and credits previously allowed
with respect to the property.
• Section 179 or 280F.
• Clean-fuel vehicles and refueling
property.
• Investment credit amount.
• Credit for employer-provided childcare
facilities and services.
• Alternative motor vehicle credit.
• Alternative fuel vehicle refueling
property credit.
• Qualified plug-in electric drive motor
vehicle credit.
• Qualified plug-in electric vehicle credit.
• Qualified electric vehicle credit.

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 9

Line 14

Enter all depreciation or amortization you
deducted or were allowed to deduct
from the date of purchase until the date
of sale. Adjust the depreciation or
amortization amount by adding any of
the following deductions previously
taken with respect to the property.
• Section 179 expense.
• Commercial revitalization deduction.
• Deduction for clean-fuel vehicles and
refueling property.

Do not file Form 6252 if line 14 is zero or
less. Instead, report the entire sale on
Form 4797, Form 8949, or the Schedule
D for your tax return.

• Deductions claimed under sections
190 and 193.
• Deductions claimed under section
1253(d)(2) and (3) (as in effect before
enactment of P.L. 103-66).
• Basis reduction to investment credit
property.

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.

Part II—Installment Sale
Income
Line 19
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.

Page 4

Form 6252 (2012)

Line 21

Line 26

Line 33

Enter all money and the FMV of any
property or services you received in
2012. 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
2012, enter zero. If in prior years an
amount was entered on the equivalent of
line 32 of the 2012 form, do not include it
on this line. Instead, enter it on line 23.
See Pledge Rule, earlier, for details
about proceeds of debt secured by
installment obligations that must be
treated as payments on installment
obligations.

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.

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 2012 from the sale.
Include allocable installment income and
any other deemed payments from prior
years. Do not include interest, whether
stated or unstated.

Part III—Related Party
Installment Sale Income

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.

Line 23
Enter all money and the FMV of property
or services you received before 2012
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.
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 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 2012,
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, Sales and Other
Dispositions of Assets.

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.

Line 37
See the instructions for line 26.

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.