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1040ez Form 2012

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1040ez Form 2012

1040ez form 2012 5. 1040ez form 2012   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. 1040ez form 2012 Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. 1040ez form 2012 Free help with your tax return. 1040ez form 2012    Free help in preparing your return is available nationwide from IRS-certified volunteers. 1040ez form 2012 The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. 1040ez form 2012 The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 1040ez form 2012 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 1040ez form 2012 Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. 1040ez form 2012 To find the nearest VITA or TCE site, visit IRS. 1040ez form 2012 gov or call 1-800-906-9887. 1040ez form 2012   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040ez form 2012 To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040ez form 2012 aarp. 1040ez form 2012 org/money/taxaide or call 1-888-227-7669. 1040ez form 2012   For more information on these programs, go to IRS. 1040ez form 2012 gov and enter “VITA” in the search box. 1040ez form 2012 Internet. 1040ez form 2012 IRS. 1040ez form 2012 gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. 1040ez form 2012 Apply for an Employer Identification Number (EIN). 1040ez form 2012 Go to IRS. 1040ez form 2012 gov and enter Apply for an EIN in the search box. 1040ez form 2012 Request an Electronic Filing PIN by going to IRS. 1040ez form 2012 gov and entering Electronic Filing PIN in the search box. 1040ez form 2012 Check the status of your 2013 refund with Where's My Refund? Go to IRS. 1040ez form 2012 gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040ez form 2012 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040ez form 2012 Check the status of your amended return. 1040ez form 2012 Go to IRS. 1040ez form 2012 gov and enter Where's My Amended Return in the search box. 1040ez form 2012 Download forms, instructions, and publications, including some accessible versions. 1040ez form 2012 Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. 1040ez form 2012 gov or IRS2Go. 1040ez form 2012 Tax return and tax account transcripts are generally available for the current year and past three years. 1040ez form 2012 Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040ez form 2012 gov. 1040ez form 2012 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 1040ez form 2012 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040ez form 2012 gov. 1040ez form 2012 Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. 1040ez form 2012 gov or IRS2Go. 1040ez form 2012 Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. 1040ez form 2012 An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. 1040ez form 2012 Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. 1040ez form 2012 If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. 1040ez form 2012 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040ez form 2012 Locate the nearest volunteer help site with the VITA Locator Tool on IRS. 1040ez form 2012 gov. 1040ez form 2012 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040ez form 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040ez form 2012 Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. 1040ez form 2012 AARP offers the Tax-Aide counseling program as part of the TCE program. 1040ez form 2012 Visit AARP's website to find the nearest Tax-Aide location. 1040ez form 2012 Research your tax questions. 1040ez form 2012 Search publications and instructions by topic or keyword. 1040ez form 2012 Read the Internal Revenue Code, regulations, or other official guidance. 1040ez form 2012 Read Internal Revenue Bulletins. 1040ez form 2012 Sign up to receive local and national tax news by email. 1040ez form 2012 Phone. 1040ez form 2012 You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040ez form 2012 Download the free IRS2Go mobile app from the iTunes app store or from Google Play. 1040ez form 2012 Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 1040ez form 2012 Call to locate the nearest volunteer help site, 1-800-906-9887. 1040ez form 2012 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040ez form 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040ez form 2012 Most VITA and TCE sites offer free electronic filing. 1040ez form 2012 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 1040ez form 2012 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 1040ez form 2012 Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. 1040ez form 2012 The automated Where's My Refund? information is available 24 hours a day, 7 days a week. 1040ez form 2012 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040ez form 2012 Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040ez form 2012 Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040ez form 2012 Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. 1040ez form 2012 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 1040ez form 2012 Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). 1040ez form 2012 You should receive your order within 10 business days. 1040ez form 2012 Call to order transcripts of your tax returns or tax account, 1-800-908-9946. 1040ez form 2012 Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. 1040ez form 2012 Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. 1040ez form 2012 Call to ask tax questions, 1-800-829-1040. 1040ez form 2012 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 1040ez form 2012 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 1040ez form 2012 These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. 1040ez form 2012 gsa. 1040ez form 2012 gov/fedrelay. 1040ez form 2012 Walk-in. 1040ez form 2012 You can find a selection of forms, publications and services — in-person, face-to-face. 1040ez form 2012 Products. 1040ez form 2012 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040ez form 2012 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 1040ez form 2012 Services. 1040ez form 2012 You can walk in to your local TAC most business days for personal, face-to-face tax help. 1040ez form 2012 An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 1040ez form 2012 If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. 1040ez form 2012 No appointment is necessary—just walk in. 1040ez form 2012 Before visiting, check www. 1040ez form 2012 irs. 1040ez form 2012 gov/localcontacts for hours of operation and services provided. 1040ez form 2012 Mail. 1040ez form 2012 You can send your order for forms, instructions, and publications to the address below. 1040ez form 2012 You should receive a response within 10 business days after your request is received. 1040ez form 2012  Internal Revenue Service 1201 N. 1040ez form 2012 Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. 1040ez form 2012    The Taxpayer Advocate Service (TAS) is your voice at the IRS. 1040ez form 2012 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 1040ez form 2012 What can TAS do for you?    We can offer you free help with IRS problems that you can't resolve on your own. 1040ez form 2012 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 1040ez form 2012 You face (or your business is facing) an immediate threat of adverse action. 1040ez form 2012 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 1040ez form 2012   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 1040ez form 2012 Here's why we can help: TAS is an independent organization within the IRS. 1040ez form 2012 Our advocates know how to work with the IRS. 1040ez form 2012 Our services are free and tailored to meet your needs. 1040ez form 2012 We have offices in every state, the District of Columbia, and Puerto Rico. 1040ez form 2012 How can you reach us?    If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. 1040ez form 2012 irs. 1040ez form 2012 gov/advocate, or call us toll-free at 1-877-777-4778. 1040ez form 2012 How else does TAS help taxpayers?    TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 1040ez form 2012 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. 1040ez form 2012 irs. 1040ez form 2012 gov/sams. 1040ez form 2012 Low Income Taxpayer Clinics. 1040ez form 2012    Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. 1040ez form 2012 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 1040ez form 2012 Visit www. 1040ez form 2012 TaxpayerAdvocate. 1040ez form 2012 irs. 1040ez form 2012 gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. 1040ez form 2012 Prev  Up  Next   Home   More Online Publications
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Help for Victims of Hurricane Sandy

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Disaster Assistance: English | Spanish

The IRS is providing help to the victims of Hurricane Sandy. Special tax relief and assistance is available to taxpayers in the Presidential Disaster Areas. 

So far, the IRS filing and payment relief applies to the following localities identified by FEMA for Individual Assistance due to Hurricane Sandy:

  • In Connecticut: Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County;

  • In Maryland: Somerset County
  • In New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren;
  • In New York: Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Sullivan, Suffolk, Ulster and Westchester;
  • In Rhode Island: Newport and Washington counties.

The IRS also announced additional tax relief to certain affected individuals and businesses, further extending tax deadlines of that relief until April 1 for the following localities:

  • In New Jersey: Monmouth and Ocean counties.
  • In New York: Nassau, Queens, Richmond and Suffolk counties.

We are monitoring the situation closely to resolve potential tax administration issues as they are identified. The IRS often updates its information on disaster relief efforts related to Hurricane Sandy. For the latest news, check this page frequently.

News Releases

  • IR-2013-16, IRS Extends Tax Relief to Some New Jersey and New York Victims of Hurricane Sandy; Return Filing and Tax Payment Deadline Extended to April 1, 2013
  • IR-2012-96, IRS Gives Additional Time to Small, Automatically Revoked Tax-Exempt Organizations Affected by Hurricane Sandy
  • IR-2012-94, IRS Extends Hurricane Sandy Diesel Fuel Penalty Waiver to Dec. 7 for New Jersey and Parts of New York
  • IR-2012-93, Retirement Plans Can Make Loans, Hardship Distributions to Sandy Victims
  • IR-2012-91, IRS Warns Consumers of Possible Scams Relating to Hurricane Sandy Relief
  • IR-2012-91SP, IRS Advierte a Consumidores de Posibles Estafas Relacionadas a las Ayudas por el Huracán Sandy
  • IR-2012-88, Treasury, IRS Announce Special Relief to Encourage Leave-Donation Programs for Victims of Hurricane Sandy
  • IR-2012-88SP, Tesoro y IRS Anuncian Alivio Especial para Estimular Programas Que Permitan la Donación de Días de Paga a Víctimas del Huracán Sandy
  • IR-2012-87, IRS Expedites Charity Applications, Urges Use of Existing Charities
  • IR-2012-87SP, El IRS Acelera Las Solicitudes de Organizaciones Benéficas, Recomienda el Uso de Caridades Existentes
  • IR-2012-86, Treasury and IRS Expand Availability of Housing for Hurricane Sandy Victims
  • IR-2012-85, IRS Waives Diesel Fuel Penalty Due to Hurricane Sandy
  • IR-2012-84, IRS Announces Qualified Disaster Treatment of Payments to Victims of Hurricane Sandy
  • IR-2012-84SP, El IRS Anuncia el Trato de Pagos Por un Desastre Calificado para las Víctimas del Huracán Sandy
  • IR-2012-83, IRS Provides Tax Relief to Victims of Hurricane Sandy; Return Filing and Tax Payment Deadline Extended to Feb. 1, 2013
  • IR-2012-83SP, IRS Ofrece Alivio a Víctimas del Huracán Sandy; Extiende Plazo de Presentación de Declaraciones de Impuestos y Pagos al 1 de Febrero de 2013
  • IR-2012-82, IRS Gives Additional Time to Taxpayers and Preparers Affected by Hurricane Sandy; File and Pay by Nov. 7

Legal Guidance

  • Notice 2013-21, Postponement of Deadline for Making an Election to Deduct for the Preceding Taxable Year Losses Attributable to Hurricane Sandy
  • Notice 2012-71, Postponement of Deadline for Transitional Relief under Notice 2011-43 for Certain Small Organizations Affected by Hurricane Sandy
  • Notice 2012-69, Treatment of Certain Amounts Paid to Section 170(c) Organizations under Certain Employer Leave-Based Donation Programs to Aid Victims of Hurricane Sandy
  • Notice 2012-68, Low-Income Housing Credit Disaster Relief for Hurricane Sandy

Other Resources

For additional information provided by the federal government on disaster recovery, visit DisasterAssistance.gov and the Hurricane Sandy Recovery page on USA.gov. The latest Federal Emergency Management Agency disaster declarations are also available.

Related Item: Hurricane Sandy News Releases and Legal Guidance

 

Page Last Reviewed or Updated: 05-Nov-2013

The 1040ez Form 2012

1040ez form 2012 10. 1040ez form 2012   Installment Sales Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Installment Sale of a Farm Installment MethodWhen to elect out. 1040ez form 2012 Revoking the election. 1040ez form 2012 More information. 1040ez form 2012 Figuring Installment Sale Income Payments Received or Considered Received ExampleSection 1231 gains. 1040ez form 2012 Summary. 1040ez form 2012 Introduction An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. 1040ez form 2012 If you realize a gain on an installment sale, you may be able to report part of your gain when you receive each payment. 1040ez form 2012 This method of reporting gain is called the installment method. 1040ez form 2012 You cannot use the installment method to report a loss. 1040ez form 2012 You can choose to report all of your gain in the year of sale. 1040ez form 2012 Installment obligation. 1040ez form 2012   The buyer's obligation to make future payments to you can be in the form of a deed of trust, note, land contract, mortgage, or other evidence of the buyer's debt to you. 1040ez form 2012 Topics - This chapter discusses: The general rules that apply to using the installment method Installment sale of a farm Useful Items - You may want to see: Publication 523 Selling Your Home 535 Business Expenses 537 Installment Sales 538 Accounting Periods and Methods 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income See chapter 16 for information about getting publications and forms. 1040ez form 2012 Installment Sale of a Farm The installment sale of a farm for one overall price under a single contract is not the sale of a single asset. 1040ez form 2012 It generally includes the sale of real property and personal property reportable on the installment method. 1040ez form 2012 It may also include the sale of property for which you must maintain an inventory, which cannot be reported on the installment method. 1040ez form 2012 See Inventory , later. 1040ez form 2012 The selling price must be allocated to determine the amount received for each class of asset. 1040ez form 2012 The tax treatment of the gain or loss on the sale of each class of assets is determined by its classification as a capital asset, as property used in the business, or as property held for sale and by the length of time the asset was held. 1040ez form 2012 (See chapter 8 for a discussion of capital assets and chapter 9 for a discussion of property used in the business. 1040ez form 2012 ) Separate computations must be made to figure the gain or loss for each class of asset sold. 1040ez form 2012 See Sale of a Farm in chapter 8. 1040ez form 2012 If you report the sale of property on the installment method, any depreciation recapture under section 1245 or 1250 of the Internal Revenue Code is generally taxable as ordinary income in the year of sale. 1040ez form 2012 See Depreciation recapture , later. 1040ez form 2012 This applies even if no payments are received in that year. 1040ez form 2012 Installment Method An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. 1040ez form 2012 A farmer who is not required to maintain an inventory can use the installment method to report gain from the sale of property used or produced in farming. 1040ez form 2012 See Inventory , later, for information on the sale of farm property where inventory items are included in the assets sold. 1040ez form 2012 If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you elect out of using the installment method. 1040ez form 2012 Electing out of the installment method. 1040ez form 2012   If you elect not to use the installment method, you generally report the entire gain in the year of sale, even though you do not receive all the sale proceeds in that year. 1040ez form 2012   To make this election, do not report your sale on Form 6252. 1040ez form 2012 Instead, report it on Schedule D (Form 1040), Form 4797, or both. 1040ez form 2012 When to elect out. 1040ez form 2012   Make this election by the due date, including extensions, for filing your tax return for the year the sale takes place. 1040ez form 2012   However, if you timely file your tax return for the year the sale takes place without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). 1040ez form 2012 Write “Filed pursuant to section 301. 1040ez form 2012 9100-2” at the top of the amended return and file it where the original return was filed. 1040ez form 2012 Revoking the election. 1040ez form 2012   Once made, the election can be revoked only with IRS approval. 1040ez form 2012 A revocation is retroactive. 1040ez form 2012 More information. 1040ez form 2012   See Electing Out of the Installment Method in Publication 537 for more information. 1040ez form 2012 Inventory. 1040ez form 2012   The sale of farm inventory items cannot be reported on the installment method. 1040ez form 2012 All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years. 1040ez form 2012   If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. 1040ez form 2012 If you do not, each payment must be allocated between the inventory and the other assets sold. 1040ez form 2012 Sale at a loss. 1040ez form 2012   If your sale results in a loss, you cannot use the installment method. 1040ez form 2012 If the loss is on an installment sale of business assets, you can deduct it only in the tax year of sale. 1040ez form 2012 Figuring Installment Sale Income Each payment on an installment sale usually consists of the following three parts. 1040ez form 2012 Interest income. 1040ez form 2012 Return of your adjusted basis in the property. 1040ez form 2012 Gain on the sale. 1040ez form 2012 In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. 1040ez form 2012 You do not include in income the part that is the return of your basis in the property. 1040ez form 2012 Basis is the amount of your investment in the property for installment sale purposes. 1040ez form 2012 Interest income. 1040ez form 2012   You must report interest as ordinary income. 1040ez form 2012 Interest is generally not included in a down payment. 1040ez form 2012 However, you may have to treat part of each later payment as interest, even if it is not called interest in your agreement with the buyer. 1040ez form 2012 Interest provided in the agreement is called stated interest. 1040ez form 2012 If the agreement does not provide for enough stated interest, there may be unstated interest or original issue discount. 1040ez form 2012 See Unstated interest , later. 1040ez form 2012    You must continue to report the interest income on payments you receive in subsequent years as interest income. 1040ez form 2012 Adjusted basis and installment sale income (gain on sale). 1040ez form 2012   After you have determined how much of each payment to treat as interest, you treat the rest of each payment as if it were made up of two parts. 1040ez form 2012 A tax-free return of your adjusted basis in the property, and Your gain (referred to as “installment sale income” on Form 6252). 1040ez form 2012 Figuring adjusted basis for installment sale purposes. 1040ez form 2012   You can use Worksheet 10-1 to figure your adjusted basis in the property for installment sale purposes. 1040ez form 2012 When you have completed the worksheet, you will also have determined the gross profit percentage necessary to figure your installment sale income (gain) for this year. 1040ez form 2012    Worksheet 10-1. 1040ez form 2012 Figuring Adjusted Basis and Gross Profit Percentage 1. 1040ez form 2012 Enter the selling price for the property   2. 1040ez form 2012 Enter your adjusted basis for the property     3. 1040ez form 2012 Enter your selling expenses     4. 1040ez form 2012 Enter any depreciation recapture     5. 1040ez form 2012 Add lines 2, 3, and 4. 1040ez form 2012  This is your adjusted basis  for installment sale purposes   6. 1040ez form 2012 Subtract line 5 from line 1. 1040ez form 2012 If zero or less, enter -0-. 1040ez form 2012  This is your gross profit     If the amount entered on line 6 is zero, Stop here. 1040ez form 2012 You cannot use the installment method. 1040ez form 2012   7. 1040ez form 2012 Enter the contract price for the property   8. 1040ez form 2012 Divide line 6 by line 7. 1040ez form 2012 This is your gross profit percentage   Selling price. 1040ez form 2012   The selling price is the total cost of the property to the buyer and includes the following. 1040ez form 2012 Any money you are to receive. 1040ez form 2012 The fair market value (FMV) of any property you are to receive (FMV is discussed at Property used as a payment under Payments Received or Considered Received ). 1040ez form 2012 Any existing mortgage or other debt the buyer pays, assumes, or takes (a note, mortgage, or any other liability, such as a lien, accrued interest, or taxes you owe on the property). 1040ez form 2012 Any of your selling expenses the buyer pays. 1040ez form 2012 Do not include stated interest, unstated interest, any amount recomputed or recharacterized as interest, or original issue discount. 1040ez form 2012 Adjusted basis for installment sale purposes. 1040ez form 2012   Your adjusted basis is the total of the following three items. 1040ez form 2012 Adjusted basis. 1040ez form 2012 Selling expenses. 1040ez form 2012 Depreciation recapture. 1040ez form 2012 Adjusted basis. 1040ez form 2012   Basis is your investment in the property for installment sale purposes. 1040ez form 2012 The way you figure basis depends on how you acquire the property. 1040ez form 2012 The basis of property you buy is generally its cost. 1040ez form 2012 The basis of property you inherit, receive as a gift, build yourself, or receive in a tax-free exchange is figured differently. 1040ez form 2012   While you own property, various events may change your original basis. 1040ez form 2012 Some events, such as adding rooms or making permanent improvements, increase basis. 1040ez form 2012 Others, such as deductible casualty losses or depreciation previously allowed or allowable, decrease basis. 1040ez form 2012 The result is adjusted basis. 1040ez form 2012 See chapter 6 and Publication 551, Basis of Assets, for more information. 1040ez form 2012 Selling expenses. 1040ez form 2012   Selling expenses relate to the sale of the property. 1040ez form 2012 They include commissions, attorney fees, and any other expenses paid on the sale. 1040ez form 2012 Selling expenses are added to the basis of the sold property. 1040ez form 2012 Depreciation recapture. 1040ez form 2012   If the property you sold was depreciable property, you may need to recapture part of the gain on the sale as ordinary income. 1040ez form 2012 See Depreciation Recapture in chapter 9 and Depreciation Recapture Income in Publication 537. 1040ez form 2012 Gross profit. 1040ez form 2012   Gross profit is the total gain you report on the installment method. 1040ez form 2012   To figure your gross profit, subtract your adjusted basis for installment sale purposes from the selling price. 1040ez form 2012 If the property you sold was your home, subtract from the gross profit any gain you can exclude. 1040ez form 2012 Contract price. 1040ez form 2012   Contract price equals: The selling price, minus The mortgages, debts, and other liabilities assumed or taken by the buyer, plus The amount by which the mortgages, debts, and other liabilities assumed or taken by the buyer exceed your adjusted basis for installment sale purposes. 1040ez form 2012 Gross profit percentage. 1040ez form 2012   A certain percentage of each payment (after subtracting interest) is reported as installment sale income. 1040ez form 2012 This percentage is called the gross profit percentage and is figured by dividing your gross profit from the sale by the contract price. 1040ez form 2012   The gross profit percentage generally remains the same for each payment you receive. 1040ez form 2012 However, see the example under Selling price reduced , later, for a situation where the gross profit percentage changes. 1040ez form 2012 Amount to report as installment sale income. 1040ez form 2012   Multiply the payments you receive each year (less interest) by the gross profit percentage. 1040ez form 2012 The result is your installment sales income for the tax year. 1040ez form 2012 In certain circumstances, you may be treated as having received a payment, even though you received nothing directly. 1040ez form 2012 A receipt of property or the assumption of a mortgage on the property sold may be treated as a payment. 1040ez form 2012 For a detailed discussion, see Payments Received or Considered Received , later. 1040ez form 2012 Selling price reduced. 1040ez form 2012   If the selling price is reduced at a later date, the gross profit on the sale also will change. 1040ez form 2012 You then must refigure the gross profit percentage for the remaining payments. 1040ez form 2012 Refigure your gross profit using Worksheet 10-2. 1040ez form 2012 New Gross Profit Percentage — Selling Price Reduced. 1040ez form 2012 You will spread any remaining gain over future installments. 1040ez form 2012    Worksheet 10-2. 1040ez form 2012 New Gross Profit Percentage — Selling Price Reduced 1. 1040ez form 2012 Enter the reduced selling  price for the property   2. 1040ez form 2012 Enter your adjusted  basis for the  property     3. 1040ez form 2012 Enter your selling  expenses     4. 1040ez form 2012 Enter any depreciation  recapture     5. 1040ez form 2012 Add lines 2, 3, and 4. 1040ez form 2012   6. 1040ez form 2012 Subtract line 5 from line 1. 1040ez form 2012  This is your adjusted  gross profit   7. 1040ez form 2012 Enter any installment sale  income reported in  prior year(s)   8. 1040ez form 2012 Subtract line 7 from line 6   9. 1040ez form 2012 Future installments     10. 1040ez form 2012 Divide line 8 by line 9. 1040ez form 2012  This is your new  gross profit percentage*. 1040ez form 2012   * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. 1040ez form 2012 Example. 1040ez form 2012 In 2011, you sold land with a basis of $40,000 for $100,000. 1040ez form 2012 Your gross profit was $60,000. 1040ez form 2012 You received a $20,000 down payment and the buyer's note for $80,000. 1040ez form 2012 The note provides for monthly payments of $1,953 each, figured at 8% interest, amortized over four years, beginning in January 2012. 1040ez form 2012 Your gross profit percentage was 60%. 1040ez form 2012 You received the down payment of $20,000 in 2011 and total payments of $23,436 in 2012, of which $17,675 was principal and $5,761 was interest according to the amortization schedule. 1040ez form 2012 You reported a gain of $12,000 on the down payment received in 2011 and $10,605 ($17,675 X 60% (. 1040ez form 2012 60)) in 2012. 1040ez form 2012 In January 2013, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2013, 2014, and 2015 are reduced to $1,483 a month amortized over the remaining three years. 1040ez form 2012 The new gross profit percentage, 47. 1040ez form 2012 32%, is figured in Example — Worksheet 10-2. 1040ez form 2012 Example — Worksheet 10-2. 1040ez form 2012 New Gross Profit Percentage — Selling Price Reduced 1. 1040ez form 2012 Enter the reduced selling  price for the property 85,000 2. 1040ez form 2012 Enter your adjusted  basis for the  property 40,000   3. 1040ez form 2012 Enter your selling  expenses -0-   4. 1040ez form 2012 Enter any depreciation  recapture -0-   5. 1040ez form 2012 Add lines 2, 3, and 4. 1040ez form 2012 40,000 6. 1040ez form 2012 Subtract line 5 from line 1. 1040ez form 2012  This is your adjusted  gross profit 45,000 7. 1040ez form 2012 Enter any installment sale  income reported in  prior year(s) 22,605 8. 1040ez form 2012 Subtract line 7 from line 6 22,395 9. 1040ez form 2012 Future installments   47,325 10. 1040ez form 2012 Divide line 8 by line 9. 1040ez form 2012  This is your new  gross profit percentage*. 1040ez form 2012 47. 1040ez form 2012 32% * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. 1040ez form 2012 You will report installment sale income of $6,878 (47. 1040ez form 2012 32% of $14,535) in 2013, $7,449 (47. 1040ez form 2012 32% of $15,742) in 2014, and $8,067 (47. 1040ez form 2012 32% of $17,048) in 2015. 1040ez form 2012 Form 6252. 1040ez form 2012   Use Form 6252 to report an installment sale in the year it takes place and to report payments received, or considered received because of related party resales, in later years. 1040ez form 2012 Attach it to your tax return for each year. 1040ez form 2012 Disposition of Installment Obligation If you are using the installment method and you dispose of the installment obligation, generally you will have a gain or loss to report. 1040ez form 2012 It is considered gain or loss on the sale of the property for which you received the installment obligation. 1040ez form 2012 Cancellation. 1040ez form 2012   If an installment obligation is canceled or otherwise becomes unenforceable, it is treated as a disposition other than a sale or exchange. 1040ez form 2012 Your gain or loss is the difference between your basis in the obligation and its fair market value (FMV) at the time you cancel it. 1040ez form 2012 If the parties are related, the FMV of the obligation is considered to be no less than its full face value. 1040ez form 2012 Transfer due to death. 1040ez form 2012   The transfer of an installment obligation (other than to a buyer) as a result of the death of the seller is not a disposition. 1040ez form 2012 Any unreported gain from the installment obligation is not treated as gross income to the decedent. 1040ez form 2012 No income is reported on the decedent's return due to the transfer. 1040ez form 2012 Whoever receives the installment obligation as a result of the seller's death is taxed on the installment payments the same as the seller would have been had the seller lived to receive the payments. 1040ez form 2012   However, if the installment obligation is canceled, becomes unenforceable, or is transferred to the buyer because of the death of the holder of the obligation, it is a disposition. 1040ez form 2012 The estate must figure its gain or loss on the disposition. 1040ez form 2012 If the holder and the buyer were related, the FMV of the installment obligation is considered to be no less than its full face value. 1040ez form 2012 More information. 1040ez form 2012   For more information on the disposition of an installment obligation, see Publication 537. 1040ez form 2012 Sale of depreciable property. 1040ez form 2012   You generally cannot report gain from the sale of depreciable property to a related person on the installment method. 1040ez form 2012 See Sale to a Related Person in Publication 537. 1040ez form 2012   You cannot use the installment method to report any depreciation recapture income up to the gain on the sale. 1040ez form 2012 However, report any gain greater than the recapture income on the installment method. 1040ez form 2012   The recapture income reported in the year of sale is included in your installment sale basis to determine your gross profit on the installment sale. 1040ez form 2012   Figure your depreciation recapture income (including the section 179 deduction and the section 179A deduction recapture) in Part III of Form 4797. 1040ez form 2012 Report the depreciation recapture income in Part II of Form 4797 as ordinary income in the year of sale. 1040ez form 2012    If you sell depreciable business property, prepare Form 4797 first in order to figure the amount to enter on line 12 of Part I, Form 6252. 1040ez form 2012 See the Form 6252 instructions for details. 1040ez form 2012   For more information on the section 179 deduction, see Section 179 Expense Deduction in chapter 7. 1040ez form 2012 For more information on depreciation recapture, see Depreciation Recapture in  chapter 9. 1040ez form 2012 Payments Received or Considered Received You must figure your gain each year on the payments you receive, or are treated as receiving, from an installment sale. 1040ez form 2012 In certain situations, you are considered to have received a payment, even though the buyer does not pay you directly. 1040ez form 2012 These situations occur when the buyer assumes or pays any of your debts, such as a loan, or pays any of your expenses, such as a sales commission. 1040ez form 2012 However, as discussed later, the buyer's assumption of your debt is treated as a recovery of basis, rather than as a payment, in many cases. 1040ez form 2012 Buyer pays seller's expenses. 1040ez form 2012   If the buyer pays any of your expenses related to the sale of your property, it is considered a payment to you in the year of sale. 1040ez form 2012 Include these expenses in the selling and contract prices when figuring the gross profit percentage. 1040ez form 2012 Buyer assumes mortgage. 1040ez form 2012   If the buyer assumes or pays off your mortgage, or otherwise takes the property subject to the mortgage, the following rules apply. 1040ez form 2012 Mortgage less than basis. 1040ez form 2012   If the buyer assumes a mortgage that is not more than your installment sale basis in the property, it is not considered a payment to you. 1040ez form 2012 It is considered a recovery of your basis. 1040ez form 2012 The contract price is the selling price minus the mortgage. 1040ez form 2012 Example. 1040ez form 2012 You sell property with an adjusted basis of $19,000. 1040ez form 2012 You have selling expenses of $1,000. 1040ez form 2012 The buyer assumes your existing mortgage of $15,000 and agrees to pay you $10,000 (a cash down payment of $2,000 and $2,000 (plus 8% interest) in each of the next 4 years). 1040ez form 2012 The selling price is $25,000 ($15,000 + $10,000). 1040ez form 2012 Your gross profit is $5,000 ($25,000 − $20,000 installment sale basis). 1040ez form 2012 The contract price is $10,000 ($25,000 − $15,000 mortgage). 1040ez form 2012 Your gross profit percentage is 50% ($5,000 ÷ $10,000). 1040ez form 2012 You report half of each $2,000 payment received as gain from the sale. 1040ez form 2012 You also report all interest you receive as ordinary income. 1040ez form 2012 Mortgage more than basis. 1040ez form 2012   If the buyer assumes a mortgage that is more than your installment sale basis in the property, you recover your entire basis. 1040ez form 2012 The part of the mortgage greater than your basis is treated as a payment received in the year of sale. 1040ez form 2012   To figure the contract price, subtract the mortgage from the selling price. 1040ez form 2012 This is the total amount (other than interest) you will receive directly from the buyer. 1040ez form 2012 Add to this amount the payment you are considered to have received (the difference between the mortgage and your installment sale basis). 1040ez form 2012 The contract price is then the same as your gross profit from the sale. 1040ez form 2012    If the mortgage the buyer assumes is equal to or more than your installment sale basis, the gross profit percentage always will be 100%. 1040ez form 2012 Example. 1040ez form 2012 The selling price for your property is $9,000. 1040ez form 2012 The buyer will pay you $1,000 annually (plus 8% interest) over the next 3 years and assume an existing mortgage of $6,000. 1040ez form 2012 Your adjusted basis in the property is $4,400. 1040ez form 2012 You have selling expenses of $600, for a total installment sale basis of $5,000. 1040ez form 2012 The part of the mortgage that is more than your installment sale basis is $1,000 ($6,000 − $5,000). 1040ez form 2012 This amount is included in the contract price and treated as a payment received in the year of sale. 1040ez form 2012 The contract price is $4,000: Selling price $9,000 Minus: Mortgage (6,000) Amount actually received $3,000 Add difference:   Mortgage $6,000   Minus: Installment sale basis 5,000 1,000 Contract price $4,000   Your gross profit on the sale is also $4,000: Selling price $9,000 Minus: Installment sale basis (5,000) Gross profit $4,000   Your gross profit percentage is 100%. 1040ez form 2012 Report 100% of each payment (less interest) as gain from the sale. 1040ez form 2012 Treat the $1,000 difference between the mortgage and your installment sale basis as a payment and report 100% of it as gain in the year of sale. 1040ez form 2012 Buyer assumes other debts. 1040ez form 2012   If the buyer assumes any other debts, such as a loan or back taxes, it may be considered a payment to you in the year of sale. 1040ez form 2012   If the buyer assumes the debt instead of paying it off, only part of it may have to be treated as a payment. 1040ez form 2012 Compare the debt to your installment sale basis in the property being sold. 1040ez form 2012 If the debt is less than your installment sale basis, none of it is treated as a payment. 1040ez form 2012 If it is more, only the difference is treated as a payment. 1040ez form 2012 If the buyer assumes more than one debt, any part of the total that is more than your installment sale basis is considered a payment. 1040ez form 2012 These rules are the same as the rules discussed earlier under Buyer assumes mortgage . 1040ez form 2012 However, they apply only to the following types of debt the buyer assumes. 1040ez form 2012 Those acquired from ownership of the property you are selling, such as a mortgage, lien, overdue interest, or back taxes. 1040ez form 2012 Those acquired in the ordinary course of your business, such as a balance due for inventory you purchased. 1040ez form 2012   If the buyer assumes any other type of debt, such as a personal loan or your legal fees relating to the sale, it is treated as if the buyer had paid off the debt at the time of the sale. 1040ez form 2012 The value of the assumed debt is then considered a payment to you in the year of sale. 1040ez form 2012 Property used as a payment. 1040ez form 2012   If you receive property rather than money from the buyer, it is still considered a payment in the year received. 1040ez form 2012 However, see Trading property for like-kind property , later. 1040ez form 2012 Generally, the amount of the payment is the property's FMV on the date you receive it. 1040ez form 2012 Exception. 1040ez form 2012   If the property the buyer gives you is payable on demand or readily tradable (see examples later), the amount you should consider as payment in the year received is: The FMV of the property on the date you receive it if you use the cash method of accounting, The face amount of the obligation on the date you receive it if you use an accrual method of accounting, or The stated redemption price at maturity less any original issue discount (OID) or, if there is no OID, the stated redemption price at maturity appropriately discounted to reflect total unstated interest. 1040ez form 2012 See Unstated interest , later. 1040ez form 2012 Examples. 1040ez form 2012 If you receive a note from the buyer as payment, and the note stipulates that you can demand payment from the buyer at any time, the note is payable on demand. 1040ez form 2012 If you receive marketable securities from the buyer as payment, and you can sell the securities on an established securities market (such as the New York Stock Exchange) at any time, the securities are readily tradable. 1040ez form 2012 In these examples, use the above rules to determine the amount you should consider as payment in the year received. 1040ez form 2012 Debt not payable on demand. 1040ez form 2012   Any evidence of debt you receive from the buyer that is not payable on demand is not considered a payment. 1040ez form 2012 This is true even if the debt is guaranteed by a third party, including a government agency. 1040ez form 2012 Fair market value (FMV). 1040ez form 2012   This is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of all the necessary facts. 1040ez form 2012 Third-party note. 1040ez form 2012   If the property the buyer gives you is a third-party note (or other obligation of a third party), you are considered to have received a payment equal to the note's FMV. 1040ez form 2012 Because the FMV of the note is itself a payment on your installment sale, any payments you later receive from the third party are not considered payments on the sale. 1040ez form 2012 The excess of the note's face value over its FMV is interest. 1040ez form 2012 Exclude this interest in determining the selling price of the property. 1040ez form 2012 However, see Exception under Property used as a payment , earlier. 1040ez form 2012 Example. 1040ez form 2012 You sold real estate in an installment sale. 1040ez form 2012 As part of the down payment, the buyer assigned to you a $50,000, 8% third-party note. 1040ez form 2012 The FMV of the third-party note at the time of the sale was $30,000. 1040ez form 2012 This amount, not $50,000, is a payment to you in the year of sale. 1040ez form 2012 The third-party note had an FMV equal to 60% of its face value ($30,000 ÷ $50,000), so 60% of each principal payment you receive on this note is a nontaxable return of capital. 1040ez form 2012 The remaining 40% is interest taxed as ordinary income. 1040ez form 2012 Bond. 1040ez form 2012   A bond or other evidence of debt you receive from the buyer that is payable on demand or readily tradable in an established securities market is treated as a payment in the year you receive it. 1040ez form 2012 For more information on the amount you should treat as a payment, see Exception under Property used as a payment , earlier. 1040ez form 2012   If you receive a government or corporate bond for a sale before October 22, 2004, and the bond has interest coupons attached or can be readily traded in an established securities market, you are considered to have received payment equal to the bond's FMV. 1040ez form 2012 However, see Exception under Property used as a payment , earlier. 1040ez form 2012 Buyer's note. 1040ez form 2012   The buyer's note (unless payable on demand) is not considered payment on the sale. 1040ez form 2012 However, its full face value is included when figuring the selling price and the contract price. 1040ez form 2012 Payments you receive on the note are used to figure your gain in the year received. 1040ez form 2012 Sale to a related person. 1040ez form 2012   If you sell depreciable property to a related person and the sale is an installment sale, you may not be able to report the sale using the installment method. 1040ez form 2012 For information on these rules, see the Instructions for Form 6252 and Sale to a Related Person in Publication 537. 1040ez form 2012 Trading property for like-kind property. 1040ez form 2012   If you trade business or investment property solely for the same kind of property to be held as business or investment property, you can postpone reporting the gain. 1040ez form 2012 See Like-Kind Exchanges in chapter 8 for a discussion of like-kind property. 1040ez form 2012   If, in addition to like-kind property, you receive an installment obligation in the exchange, the following rules apply to determine installment sale income each year. 1040ez form 2012 The contract price is reduced by the FMV of the like-kind property received in the trade. 1040ez form 2012 The gross profit is reduced by any gain on the trade that can be postponed. 1040ez form 2012 Like-kind property received in the trade is not considered payment on the installment obligation. 1040ez form 2012 Unstated interest. 1040ez form 2012   An installment sale contract may provide that each deferred payment on the sale will include interest or that there will be an interest payment in addition to the principal payment. 1040ez form 2012 Interest provided in the contract is called stated interest. 1040ez form 2012   If an installment sale contract does not provide for adequate stated interest, part of the stated principal amount of the contract may be recharacterized as interest. 1040ez form 2012 If Internal Revenue Code section 483 applies to the contract, this interest is called unstated interest. 1040ez form 2012   If Internal Revenue Code section 1274 applies to the contract, this interest is called original issue discount (OID). 1040ez form 2012   Generally, if a buyer gives a debt in consideration for personal use property, the unstated interest rules do not apply. 1040ez form 2012 Therefore, the buyer cannot deduct the unstated interest. 1040ez form 2012 The seller must report the unstated interest as income. 1040ez form 2012 Personal-use property is any property in which substantially all of its use by the buyer is not in connection with a trade or business or an investment activity. 1040ez form 2012   If the debt is subject to the Internal Revenue Code section 483 rules and is also subject to the below-market loan rules, such as a gift loan, compensation-related loan or corporation-shareholder loan, then both parties are subject to the below-market loan rules rather than the unstated interest rules. 1040ez form 2012   Unstated interest reduces the stated selling price of the property and the buyer's basis in the property. 1040ez form 2012 It increases the seller's interest income and the buyer's interest expense. 1040ez form 2012   In general, an installment sale contract provides for adequate stated interest if the stated interest rate (based on an appropriate compounding period) is at least equal to the applicable federal rate (AFR). 1040ez form 2012    The AFRs are published monthly in the Internal Revenue Bulletin (IRB). 1040ez form 2012 You can get this information by contacting an IRS office. 1040ez form 2012 IRBs are also available at IRS. 1040ez form 2012 gov. 1040ez form 2012 More information. 1040ez form 2012   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. 1040ez form 2012 Example. 1040ez form 2012 You sell property at a contract price of $6,000 and your gross profit is $1,500. 1040ez form 2012 Your gross profit percentage is 25% ($1,500 ÷ $6,000). 1040ez form 2012 After subtracting interest, you report 25% of each payment, including the down payment, as installment sale income from the sale for the tax year you receive the payment. 1040ez form 2012 The remainder (balance) of each payment is the tax-free return of your adjusted basis. 1040ez form 2012 Example On January 3, 2013, you sold your farm, including the home, farm land and buildings. 1040ez form 2012 You received $50,000 down and the buyer's note for $200,000. 1040ez form 2012 In addition, the buyer assumed an outstanding $50,000 mortgage on the farm land. 1040ez form 2012 The total selling price was $300,000. 1040ez form 2012 The note payments of $25,000 each, plus adequate interest, are due every July 1 and January 1, beginning in July 2013. 1040ez form 2012 Your selling expenses were $15,000. 1040ez form 2012 Adjusted basis and depreciation. 1040ez form 2012   The adjusted basis and depreciation claimed on each asset sold are as follows:   Depreciation Adjusted Asset Claimed Basis Home* -0- $33,743 Farm land -0- 73,610 Buildings $31,500 35,130 * Owned and used as main home for at least 2 of the 5 years prior to the sale Gain on each asset. 1040ez form 2012   The following schedule shows the assets included in the sale, each asset's selling price based on its respective value, the selling expense allocated to each asset, the adjusted basis of each asset, and the gain on each asset. 1040ez form 2012 The selling expense for each asset is 5% of the selling price ($15,000 selling expense ÷ $300,000 selling price). 1040ez form 2012   Selling Selling Adjusted     Price Expense Basis Gain Home* $60,000 $3,000 $33,743 $23,257 Farm land  165,000  8,250  73,610  83,140 Buildings 75,000 3,750 35,130 36,120   $300,000 $15,000 $142,483 $142,517 * Owned and used as main home for at least 2 of the 5 years prior to the sale Depreciation recapture. 1040ez form 2012   The buildings are section 1250 property. 1040ez form 2012 There is no depreciation recapture income for them because they were depreciated using the straight line method. 1040ez form 2012 See chapter 9 for more information on depreciation recapture. 1040ez form 2012   Special rules may apply when you sell section 1250 assets depreciated under the straight line method. 1040ez form 2012 See the Unrecaptured Section 1250 Gain Worksheet in the Instructions for Schedule D (Form 1040). 1040ez form 2012 See chapter 3 of Publication 544, Sales and Other Dispositions of Assets, for more information on section 1250 assets. 1040ez form 2012 Installment sale basis and gross profit. 1040ez form 2012   The following table shows each asset reported on the installment method, its selling price, installment sale basis, and gross profit. 1040ez form 2012     Installment     Selling Sale Gross   Price Basis Profit Farm land $165,000 $73,610 $83,140 Buildings 75,000 35,130 36,120   $240,000 $108,740 $119,260 Section 1231 gains. 1040ez form 2012   The gain on the farm land and buildings is reported as section 1231 gains. 1040ez form 2012 See Section 1231 Gains and Losses in chapter 9. 1040ez form 2012 Contract price and gross profit percentage. 1040ez form 2012   The contract price is $250,000 for the part of the sale reported on the installment method. 1040ez form 2012 This is the selling price ($300,000) minus the mortgage assumed ($50,000). 1040ez form 2012   Gross profit percentage for the sale is 47. 1040ez form 2012 70% ($119,260 gross profit ÷ $250,000 contract price). 1040ez form 2012 The gross profit percentage for each asset is figured as follows:   Percent Farm land ($83,140 ÷ $250,000) 33. 1040ez form 2012 256 Buildings ($36,120 ÷ $250,000) 14. 1040ez form 2012 448 Total 47. 1040ez form 2012 70 Figuring the gain to report on the installment method. 1040ez form 2012   One hundred percent (100%) of each payment is reported on the installment method. 1040ez form 2012 The total amount received on the sale in 2013 is $75,000 ($50,000 down payment + $25,000 payment on July 1). 1040ez form 2012 The installment sale part of the total payments received in 2013 is also $75,000. 1040ez form 2012 Figure the gain to report for each asset by multiplying its gross profit percentage times $75,000. 1040ez form 2012   Income Farm land—33. 1040ez form 2012 256% × $75,000 $24,942 Buildings—14. 1040ez form 2012 448% × $75,000 10,836 Total installment income for 2013 $35,778 Reporting the sale. 1040ez form 2012   Report the installment sale on Form 6252. 1040ez form 2012 Then report the amounts from Form 6252 on Form 4797 and Schedule D (Form 1040). 1040ez form 2012 Attach a separate page to Form 6252 that shows the computations in the example. 1040ez form 2012 If you sell depreciable business property, prepare Form 4797 first in order to figure the amount to enter on line 12 of Part I, Form 6252. 1040ez form 2012 Section 1231 gains. 1040ez form 2012   The gains on the farm land and buildings are section 1231 gains. 1040ez form 2012 They may be reported as either capital or ordinary gain depending on the net balance when combined with other section 1231 losses. 1040ez form 2012 A net 1231 gain is capital gain and a net 1231 loss is an ordinary loss. 1040ez form 2012 Installment income for years after 2013. 1040ez form 2012   You figure installment income for the years after 2013 by applying the same gross profit percentages to the payments you receive each year. 1040ez form 2012 If you receive $50,000 during the year, the entire $50,000 is considered received on the installment sale (100% × $50,000). 1040ez form 2012 You realize income as follows:   Income Farm land—33. 1040ez form 2012 256% × $50,000 $16,628 Buildings—14. 1040ez form 2012 448% × $50,000 7,224 Total installment income $23,852   In this example, no gain ever is recognized from the sale of your home. 1040ez form 2012 You will combine your section 1231 gains from this sale with section 1231 gains and losses from other sales in each of the later years to determine whether to report them as ordinary or capital gains. 1040ez form 2012 The interest received with each payment will be included in full as ordinary income. 1040ez form 2012 Summary. 1040ez form 2012   The installment income (rounded to the nearest dollar) from the sale of the farm is reported as follows: Selling price $190,000 Minus: Installment basis (108,740) Gross profit $81,260     Gain reported in 2012 (year of sale) $35,778 Gain reported in 2013:   $50,000 × 47. 1040ez form 2012 70% 23,850 Gain reported in 2014:   $50,000 × 47. 1040ez form 2012 70% 23,850 Gain reported in 2015:   $50,000 × 47. 1040ez form 2012 70% 23,850 Gain reported in 2016:   $25,000 × 47. 1040ez form 2012 70% 11,925 Total gain reported $119,253 Prev  Up  Next   Home   More Online Publications