O

Installment Sale Income

Form 6252  Attach to your tax return.

Department of the Treasury

Internal Revenue Service

 Use a separate form for each sale or other disposition of

property on the installment method.

Name(s) shown on return Identifyi

Description of property 

Date acquired (month, day, year)  / / 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 

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

1

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)

2a

3

Subtract line 6 from line 5

4

Cost or other basis of property sold

5 5

Depreciation allowed or allowable

6

6

Adjusted basis. Subtract line 9 from line 8

7 7

Commissions and other expenses of sale

8 8

Income recapture from Form 4797, Part III (see instructions)

9 9

Add lines 10, 11, and 12

10 10

Subtract line 13 from line 5. If zero or less, do not complete the rest of this form (see instructions)

11

If the property described on line 1 above was your main home, enter the amount of your excluded

gain (see instructions). Otherwise, enter -0-

11

12

Gross profit. Subtract line 15 from line 14

12

13

Subtract line 13 from line 6. If zero or less, enter -0-

13

Contract price. Add line 7 and line 17

14 14

Installment Sale Income. Complete this part for the year of sale and any year you recei

have certain debts you must treat as a payment on installment obligations.

15

Gross profit percentage. Divide line 16 by line 18. For years after the year of sale, see instructions

15

16

If this is the year of sale, enter the amount from line 17. Otherwise, enter -0-

16

17

Payments received during year (see instructions). Do not include interest, whether stated or unstated

17

18

Add lines 20 and 21

18

Payments received in prior years (see instructions). Do not include

interest, whether stated or unstated

19 19

20

Installment sale income. Multiply line 22 by line 19

20

21

Enter the part of line 24 that is ordinary income under the recapture rules (see instructions)

21

Subtract line 25 from line 24. Enter here and on Schedule D or Form 4797 (see instructions)

22 22

Related Party Installment Sale Income. Do not complete if you received the final paym

Name, address, and taxpayer identifying number of related party

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

If the answer to question 28 is “Yes,” complete lines 30 through 37 below unless one of the followin

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 (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 

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 

for either of the dispositions. If this box is checked, attach an explanation (see instructions).

23

Selling price of property sold by related party (see instructions)

23

24 24

Enter contract price from line 18 for year of first sale

25 25

Enter the smaller of line 30 or line 31

26 26

Total payments received by the end of your 2005 tax year (see instructions)

27

Subtract line 33 from line 32. If zero or less, enter -0-

28

Multiply line 34 by the gross profit percentage on line 19 for year of first sale

29

Enter the part of line 35 that is ordinary income under the recapture rules (see instructions)

30

Subtract line 36 from line 35. Enter here and on Schedule D or Form 4797 (see instructions)

30

For Paperwork Reduction Act Notice, see page 4. 

Part II

Part I

Part III

Cat. No. 13601R

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Form 6252 (2005) 

General Instructions

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 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.

Special Rules

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.

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.

For certain dispositions 

installment method, if a

obligation is pledged as 

debt, the net proceeds 

debt are treated as pay

installment obligation. H

amount treated as paym

more than the excess o

installment contract pric

payments received und

before the secured deb

An installment obliga

security on a debt to th

payment of principal an

debt is directly secured 

the installment obligatio

December 16, 1999, pa

is treated as directly se

interest in an installmen

extent an arrangement 

satisfy all or part of the 

installment obligation.

The pledge rule appli

installment sale after 19

price of over $150,000 

● Personal use propert

an individual,

● Timeshares and resid

However, the pledge r

to pledges made after De

if the debt is incurred to 

principal amount of a de

outstanding on Decembe

was secured by nondeal

installment obligations o

all times after that date u

This exception does not 

that the principal amount 

resulting from the refinan

principal amount of the r

immediately before the re

the pledge rule does not 

due to the calling of a de

the debt is then refinance

other than this creditor o

to the creditor.

Section references are to the Internal

Revenue Code unless otherwise noted.

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.

Later Years

Complete lines 1 through 4 and Part II

for any year in which you receive a

payment from an installment sale.

Interest

Installment Sales to Related Party

Sale of Depreciable Property to

Related Person

Pledge Rule

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.

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.

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 inco

one of the principal purp

(for example, no significa

benefits will result from t

installment method does 

the sale on Schedule D o

whichever applies. Treat 

will receive as if they we

year of sale. Use FMV fo

is contingent as to amou

cannot be readily determ

recovered ratably.

● Farm property, and

Complete Part III unless you received

the final payment during the tax year.
Form 6252 (2005) 

How to report the interest. The interest

is not figured on Form 6252. See section

453A to figure the interest. Enter the

interest as an additional tax on your tax

return. Include it in the amount to be

entered on the total tax line after credits

and other taxes. For individuals, this is

line 63 of the 2005 Form 1040. For

corporations, it is line 11 of Schedule J

(Form 1120). Write “Section 453A(c)

interest” to the left of the amount.

Corporations can deduct the interest

in the year it is paid or accrued. For

individuals and other taxpayers, this

interest is not deductible.

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

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.

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.

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,

disabled access, new markets, or

employer-provided child care credit or

casualty losses previously allowed. For

details, see Pub. 551, Basis of Assets.

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.

Enter sales commissions, advertising

expenses, attorney and legal fees, etc.,

incurred to sell the property.

If the property describ

your main home, you m

exclude part or all of y

Pub. 523, Selling Your 

Part II—Installm

Income

Enter the gross profit p

determined for the yea

you did not file Form 6

Enter all money and th

property you received 

as payments any amo

pay off a mortgage or 

pay broker and legal fe

not include as a paym

note, a mortgage, or o

assumed by the buyer

or other debt that is pa

or readily tradable in a

securities market is co

payment. For sales oc

October 22, 2004, a no

is considered a payme

issued by a corporatio

entity. If you did not re

payments in 2005, ent

years an amount was 

equivalent of line 32 of 

do not include it on th

enter it on line 23. See 

page 2 for details abou

debt secured by instal

that must be treated a

installment obligations

Line 5

Line 6

Line 8

Line 9

Line 11

Line 12

Line 14

Line 15

Line 19

Line 21

Generally, interest must be paid 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.

Interest must be paid 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 in tax years beginning

before 1988, or

● Personal property before 1989.

Interest on Deferred Tax

Do not file Form 6252 

or less. Instead, report 

Form 4797 or the Sche

tax return.

Enter all money and th

you received before 20

Include allocable insta

any other deemed pay

years.

Line 23

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

If there is no stated maximum selling

price, such as in a contingent payment

sale, attach a schedule showing the

Enter here and on Form 

any ordinary income re

1252, 1254, or 1255 pr

of sale or all remaining 

prior year sale. Do not 

income from a section 

deduction. If this is the 

complete Form 4797, P

from line 27c, 28b, or 2

Line 25

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.

Form 6252, enter “N/A

Form 4797. Partnershi

corporations and their 

shareholders, see the 

Form 4797.
Form 6252 (2005) 

The time needed to 

this form will vary depe

individual circumstance

burden for individual ta

form is approved unde

number 1545-0074 and 

the estimates shown in 

for their individual inco

estimated burden for a

who file this form is sh

Recordkeeping 

Learning about the law

or the form 

Preparing the form 

If you have comment

accuracy of these time 

suggestions for making 

we would be happy to 

See the instructions for 

with which this form is 

Paperwork Reduction 

ask for the information 

carry out the Internal R

the United States. You 

give us the information

ensure that you are co

these laws and to allow 

collect the right amoun

You are not required 

information requested 

subject to the Paperwo

unless the form display

control number. Books 

relating to a form or its 

be retained as long as 

may become material i

administration of any In

law. Generally, tax retu

information are confide

by section 6103.

Copying, assembling, 

sending the form

to the IRS 

If the related party sold all or part of the

property from the original sale in 2005,

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.

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 2005 from the sale.

Include allocable installment income and

any other deemed payments from prior

years. Do not include interest, whether

stated or unstated.

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.

See the instructions fo

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.

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

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 26

Line 29

Line 30

Line 33

Line 36

Line 37

Amount realized. The amount realized

from a sale or exchange is the total of all

money received plus the fair market value

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.

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.