t342
New Member

Investors & landlords

Thanks for this good info. And again, I am not a tax expert. I do think, however, based on the items you highlight here (which are the main items I have found also), the rules strongly suggest that non-QSB, non-publicly traded stocks can qualify for installment sale treatment. The key instructional doc on Installment Sales is 537, and that is fairly straightforward in saying the following:

1) An installment sale is the sale of property where you receive at least one payment after the tax year of sale;
2) certain types of sales are *specifically* (ie, expressly) excluded, included sales of stock traded on an established exchange; and
3) if a sale is an installment sale, you must report it as such unless you specifically elect out of it.

Based on these points, the document stands for the idea that you presume a property sale with at least one payment after tax year of sale is an installment sale, unless there is a clearly marked exception or you expressly elect to treat it differently. Regarding stock sales, the only clearly marked exception is that regarding sales of stock on established exchanges.

The qualified small business documentation you note suggests to me not that the IRS is saying only that kind of stock can be an installment sale; but rather that there are a variety of special rules for qualified small business stock, and in the context of explaining those rules the IRS explains how to properly handle installment sales in that context. Basically, not that only qsb stock qualifies for installment sale treatment, but that there are special characteristics of qsb stock that you should keep in mind when reporting installment sales.

That, at least, is my non-professional reading. If there is somewhere where the IRS provides for more exclusions to installment sales, or provides further detail about this all, that could change things. I am also just not sure why Turbo Tax does what it does. (Anyone have other TT versions, like business, to see what they do there?) But otherwise it seems that non-qsb, non-publicly traded stock should be allowed to be included in installment sales.