I sold a rental property in 2010 on a thirty year contract , the buyer defaulted on the contract in January of 2016 with a balance of 97,000 dollars on a 118,000 contract

[view2 · Accepted solution]

When you repossess your property after making an installment sale, you must figure the following amounts. 

    1.Your gain (or loss) on the repossession. 

    2.Your basis in the repossessed property. 

Link to IRS  guide and worksheets.

Repossession and Mandatory rules.

http://www.irs.gov/publications/p537/ar02.html#en_US_2016_publink1000221751

[moneymy]

I have calculated the taxable gain on repossession of real property.  1) How do I enter that gain into TurboTax?  I have read that this amount is supposed to be reported on the form used to report the sale.  In this case, the installment sale profits are reported on Schedule D, line 4.  These amount are actually fed from the Form 6252.  What line do I use to report the gain on repossession?   Do I enter on another form to feed to Schedule D? 2) Do I have to enter anything into Form 6252 to "close" the installment sale history?

[KEY007]

I have the same problem, if you solved it can you share how you file forms for this

[DaveF1006]

When you report a repossession, you must determine the gain or loss on the property. When you repossess your property after making an installment sale, you must figure the following amounts. 

    1.Your gain (or loss) on the repossession. 

    2.Your basis in the repossessed property. 

Basis in installment obligation.   Your basis is figured on the obligation's full face value or its FMV at the time of the original sale, whichever you used to figure your gain or loss in the year of sale. From this amount, subtract all payments of principal you have received on the obligation. The result is your basis in the installment obligation. If only part of the obligation is discharged by the repossession, figure your basis in only that part. You report gain or loss from a repossession on the same form you used to report the original sale. If you reported the sale on Form 4797, use it to report the gain or loss on the repossession.

If you used form 4797 to report in your original sale, you will need to report the gain or loss on form 4797.  To report this, go to:

1. Tax tools
2. tools
3. topic search
4. type in 4797

As you go through the questions, Turbo Tax does not make an assumption that this is a repossession. The only purpose in reporting this is to determine if you have a gain or loss on the repossession.