how to report real estate property insallment sale in TT Business 2023

[Premieruser14]

Hello, I working on the tax return for my LLC that sold a rental real estate property in 2023.  partial payment was received in 2023, with the balance scheduled over the next several years.  How do I enter this as an installment sale in TT business 2023?

Specifically: in the "FEDERAL TAXES" -> "RENTAL REAL ESTATE" section, I selected to edit the asset that was "Disposed" -> selected "sold".  TT Business says "we'll ask if the transaction was an installment sale later", however I click and progress through all the questions/menus and the option for Installment sale never shows up.  In previous yrs the option existed, but not in version 2023. 

I'll note that the TT website does indicate form 6252 is now available and I have downloaded the latest update, however am still having this issue.

I have seen posts from previous years indicating the "search" button could be clicked, then enter "installment" and the option to "jump to installment sale" is visible.  I am not able to do this in TT business 2023... maybe I am missing something.

Any suggestions appreciated.  Thank you.

[PatriciaV]

Did you have a gain on the sale of the property? The installment Sale module is triggered by a gain on the sale of business property. Also, the gain must exceed the amount of accumulated depreciation (if any) taken over the life of the property.

Note that there is no special topic for installment sales in TurboTax Business.

[Premieruser14]

Thank you PatriciaV, for the response.

Yes, I did have a gain on the sale, and it did exceed the accumulated depreciation, so that is not the issue.  However I must thank you as you triggered a thought.  I had assigned all the gain on sale to the building and 0 gain to the land (as bldg and land is sold together I considered this an arbitrary choice).  I tried moving $1 of gain to the land so both land and building show a gain and this did successfully trigger the Installment Sale module.  

I suppose the lesson learned is the gain on sale must be distributed such that both show a gain to trigger the Installment Sale module.

Thanks again.

[DianeW777]

Yes, a sales price must be entered for each asset, especially when an installment sale is involved. The appropriate way to allocate sales price and expense is shown below as an example for your use.

Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset.  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset. (Choices would also be fair market value on the date of the sale or adjusted basis on the date of the sale, which is cost less depreciation.)

Example:  Original Cost (of each asset on your depreciation schedule)

$10,000 Land                = 13.33% 

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.

@Premieruser14