I sold land in 2016. I received an installment note for the sale. I received 6 monthly payments of principal and interest. Where do I enter the gain I received from the note.
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Hi:
Capital gains, losses, and 1099-B forms are all entered in the same place:
why the principal payment amount is considered as capital gain? Please advise.
When you report an installment sale you first calculate your profit percentage on the sale.
The percentage of the principal payment that represents profit is taxed as a capital gain.
The interest payment is reported as interest, and taxed as ordinary income.
Hi, not sure if this is a bug in the software itself or I made data entry mistake. I sold my property with 10years installment payment plan from the buyer. I actually paid the capital gain already at the same year the property is sold. But, why TurboTax is putting the yearly principal payment in the capital gain box for me, not in the ordinary interest box. I simply followed the steps provided, but this steps lead me to the enter the data in the wrong place. Please advise. I needed to fix it because I do not want to overpay since I already paid the capital gain at year 1.
If you already paid the capital gain on the entire sale in year 1, you should not be reporting it as an installment sale.
Just report the interest you are receiving as interest received.
The tax has already been paid on the principal.
An installment sale is a sale of property where you'll receive at least one payment after the tax year in which the sale occurs.
You're required to report gain on an installment sale under the installment method unless you "elect out" on or before the due date for filing your tax return (including extensions) for the year of the sale.
You may elect out by reporting all the gain as income in the year of the sale.
Topic No. 705 Installment Sales
Hello, sorry to bother you again... just wanted to correct my previous findings. For installment sale of my property in 2017, the actual entire capital gain was $24,050 and I already claimed $19,950 at year 1. So, year 2018, where and how I can enter the remaining gains $4100. Apparently, I did it wrong in 2018. I need to fix it. I understand where the interest goes. I am confused by following the steps actually. It will ask me if I have installment Sale in 2018 which I did not. In my original 2018 tax return, I answered Yes. That is wrong.
I sold the rental property on 7 year contract in 2021 and want to delay payment of capital gain but 2021 premier keep on reporting all gain for year 2021 even if i report it as installment sale. What i am doing wrong?
You should review the entries for your installment sale.
To verify your entries are correct follow these steps:
If you still have problems after reviewing your entries please post your question on this thread.
Thanks for your advise. I followed your instruction and when I got to installment sale, It stated that I have already reported it in business sale and continue to report all capitol gain for this year. Will greatly appreciate how to correct it. Thanks
Thanks for your advise. I followed your instruction and when I got to installment sale, It stated that I have already reported it in business sale and continue to report all capitol gain for this year. Will greatly appreciate how to correct it. Thanks
@azlari You need to delete all of the installment sale information that you have entered and start over. Be careful how you answer the questions.
Thanks for the response. I figured it out after I went to IRS website. It is disappointing the turbo Tax directions are not clear. I have been using tubo tax for decades. This year version is not as good as before. I never had to go to community or other places to get answers.
I can't get Turbotax to only reflect the gain of the first year - it keeps applying the full gain on the sale, but shouldn't I be able to only reflect the gain on the "down payment" portion?
I did reflect the Loan amount when asked for "the amount of debt the buyer took over"
Thanks, @RobertG
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