So much for MS Copilot.
Google Gemini says:
Yes, the down payment is included on line 21 of Form 6252.
Line 21 of Form 6252, Installment Sale Income, is for reporting the "Payments received during the year." This includes all cash and the fair market value of any property or services received. Since a down payment is a cash payment made at the time of sale, it is considered part of the payments received during the year and should be included on line 21.
Here's a breakdown of what to include on line 21:
- Cash: This includes the down payment and any other cash payments received during the year.
- Fair Market Value of Property or Services: If you received property or services as part of the sale, include their fair market value.
- Amounts Withheld: Include any amounts withheld to pay off a mortgage or other debt, or to pay real estate broker or legal fees.
Important Note: Do not include the buyer's note, a mortgage, or other debt assumed by the buyer on line 21. However, a note or other debt that is payable on demand or readily tradable on an established securities market is considered a form of payment and should be included.
By including the down payment on line 21, you are accurately reporting the payments received during the year for the installment sale. This is essential for calculating the correct amount of taxable income from the sale.
