How do I enter an installment sale of stock?

[okrandy]

I sold a block of company stock in 2017 for which I am being paid over a period of four years with the first payment in 2017.  In other words, this is an installment sale.  My 1099-B shows the entire sale amount.  However, I only received one quarter of it in 2017 on which I made an estimated tax payment. How do I enter the  installment aspect of the sale in TTax?

[TomYoung]

Was the stock publicly traded?  Was the stock Qualified Small Business Stock?

[okrandy]

Thank you Tom.  No, the company is not publicly traded.  We are an ESOP. Employees have stock in their ESOP account.  Senior staff also own stock outright, outside of ESOP.  It is this certificated (non-ESOP) stock that I sold.

[TomYoung]

Well, you should be able to report the sale using the installment method.  Not sure why you got a 1099-B?  Was a broker involved?  While you can "elect" out of installment sales reporting, usually you wouldn't want to do so.

[okrandy]

No broker.  Everything was handles by the Company.  
Should I get a 1099-B for the amount I actually received (i.e. the first installment)?

[TomYoung]

Yes, I'd think so.  Not sure that a 1099-B was necessary in the first place.

[okrandy]

Ok.  Thank you.

[TomYoung]

The 1099-B instructions read:

"A broker or barter exchange must file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for each person...."

AND

"A broker is any person who, in the ordinary course of a trade or business, stands ready to effect sales to be made by others."

A company that REGULARLY redeems its own stock can be considered a "broker" even if the company isn't a registered "broker" in the usual sense.

Most "private" sales don't result in a 1099-B unless a real broker is involved.

[TomYoung]

By the way, TurboTax doesn't handle an installment sale in this situation.

[okrandy]

My controller told me to enter the  1099-B as submitted and handle the installment aspects of the sale on form 6252.  Are you saying that TTax will not handle the form 6252 aspect of the transaction?

[okrandy]

Should I be treating this an installment sale under Less Common Income?

[TomYoung]

Yes.  Actually it was TurboTax that told me that TurboTax cannot be used in this situation, but I tried it, and it can.

[okrandy]

Ok, so don't enter the 1099-B in the normal location.  Just use the information under Less Common Income?

[TomYoung]

Yes.

[jwbdevil]

I have a slight "spin" on the question.  I received a K-1 for my portion of the sale of a company that I was an executive in.  The K-1 is for the full value of my consideration in the transaction.  However, about 15% of the transaction value is being held in escrow (e.g. I got paid 85% in the current tax year) with two potential  payments, one on the anniversary of the transaction (which will be in tax year 2018) and one 6 months after the anniversary (which will be in tax year 2019).  Neither escrow payment is guaranteed.  I'm assuming I should do an Installment Sale in TT.  My question is do I still enter the data from the K-1 in the Income Section of TT for K-1s or just populate the installment sale information as defined above?  I cannot get a corrected K-1 for the amount paid to me as the legal entity that issued the K-1 ceased to exist with the closing of the transaction.  Any guidance is much appreciated.