In 2021, I sold my commercial building that I used for my CNC shop to an individual not in the same industry. We agreed to Installment Sale. I am entering the information on Form 6252. My first question is - will I report Part II line 26 which will be my taxable income on Schedule D or Form 4797. It gives me two options to choose from and there is big difference on the balance. I currently have it being report on Form 4797 where it appears on Part I line 4 Section 1231 gain from Installment Sales from Form 6252. Is this correct? When I have the amount appear on this line my balance due is $59,487.00. If I report it on schedule D my balance due drops down to $34,245.00. A big difference in balance due.
On my Form 6252. I filled in the following lines:
line 5 Selling Price: $900K
line 7: Subtract 6 from 5: $900K
line 8: Cost or other basis of property sold: $393751.00
line 9 Depreciation allowed or allowable: $256240.00
line 10: Adjusted basis: $137511.00
line 11: Commissions and other expenses: $35510.00
line 12: Income recapture from Form 4797 Part III - $0.00
line 13 Add lines 10,11,12: $173021.00
Line 14 Subtract line 13 from line 5: $726979
Line 16: Gross Profit: $726979.00
Line 18: Contract Price: $900K
Part II
line 19: gross profit %: 0.80775
line 21: Payments received: $377896.00
line 22: add line 20 and 21: $377896.00
line 24: Installment sale income: $305245.00
line 26: Subtract line 25 from line 24. Enter amt on Sch D or Form 4797: $305245
Not sure where to enter line 26.
Second question: Also from reading the publications, it says the seller must recognize all recapture income in the year of a sale, up to the total amount of gain realized. Am I doing that with amount listed on Line 26 $305245.00
On my depreciation module when I selected disposed of building. I left the sell price $0 and said do not carry to form 4797. I entered the sale directly on the Form 6252 as listed above - is that the correct way? Because if I enter the sale price and select to carry to Form 4797 to Part III Section 1250 and enter the info on form 6252 its adding $900K my taxable income on top of the $305245 from line 26 on Form 6252. Or should enter 0 for sale Price and yes to carry to Form 4797 Part III showing cost basis and depreciation leaving out the $900K on the sell price line so the IRS sees the building listed as disposed
Any guidance would be greatly appreciated.
