OMB No. 1545-0228 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.

Attachment

Sequence No. 79

Name(s) shown on return Identifying number

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 Yes No

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 Yes No

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 receive a payment or

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 payment this tax year.

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 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 (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).

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 2004 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. Form 6252 (2004)

Part II

Part I

Part III

Yes No

Cat. No. 13601R

b

a

b

c

d

e

31

32

33

34

35

36

37

31

32

33

34

35

36

37

/ /

2004
Form 6252 (2004) Page 2

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, complete Part III.

Special Rules

If any part of an installment payment you

received is for interest, report that

interest 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 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 with a sales price of

over $150,000 of:

● Any property disposed of after 1988

(except personal use property disposed

of by an individual and farm property),

and

● Real property used in a trade or

business or held for the production of

rental income, for pledges made after

December 17, 1987.

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.

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.

What’s New

● Partnerships and S corporations and

their partners and shareholders must

follow new procedures for reporting sales

or other dispositions by the partnerships

or S corporations of property for which

the section 179 expense deduction was

claimed. For details, see the Instructions

for Form 4797.

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.

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 person or entity to

● For sales occurring after October 21,

2004, the receipt of readily tradable debt

is considered a payment (regardless of

the issuer) and the payment is not

eligible for installment sale treatment.

See the instructions for line 21.

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,

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.
Form 6252 (2004) Page 3

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 62 of the 2004 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.

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 downward basis

adjustment under section 50(c) (or the

corresponding provision of prior law); 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

investment tax credit recapture amount

if the basis of the property was reduced

under section 50(c) (or the

corresponding provision of prior law);

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 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

Enter the gross profit percentage

determined for the year of sale even if

you did not file Form 6252 for that year.

Enter all money and the FMV of any

property you received in 2004. 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 is considered a payment if

it is payable on demand or readily

tradable in an established securities

market and issued by a corporation or

governmental entity. For sales occurring

after October 21, 2004, a note or other

debt that is readily tradable in an

established securities market is

considered a payment even if it was not

issued by a corporation or governmental

entity. If you did not receive any

payments in 2004, enter zero. If in prior

years an amount was entered on the

equivalent of line 32 of the 2004 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 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 if line 14 is zero

or less. Instead, report the entire sale on

Form 4797 or the Schedule D for your

tax return.

Enter all money and the FMV of property

you received before 2004 from the sale.

Include allocable installment income and

any other deemed payments from prior

years.

Any ordinary income recapture under Line 23

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

If there is no stated maximum selling

price, such as in a contingent sale, attach

a schedule showing the computation of

gain. Enter the taxable part on line 24 and

also on line 35 if Part III applies. See

Temporary Regulations section 15A.453-1.

Form 4797. Partnerships and S

corporations and their partners and

shareholders, see the Instructions for

Form 4797.

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

Line 25
Form 6252 (2004) Page 4

The time needed to complete and file

this form will vary depending on

individual circumstances. The estimated

average time is:

Recordkeeping 1 hr., 18 min.

Learning about the law

or the form 24 min.

Preparing the form 1 hr.

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.

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.

Copying, assembling, and

sending the form

to the IRS 20 min.

If the related party sold all or part of the

property from the original sale in 2004,

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 2004 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 for line 26.

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.

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.