topic Im a used car dealer and i have installment sales. how do i report them on my taxes. in Deductions & credits

Im a used car dealer and i have installment sales. how do i report them on my taxes.

samijasonb — Tue, 04 Jun 2019 20:06:49 GMT

my sales shows the full amount, but i have installment sales and want to report correctly. thanks

If you are a cash-basis taxpayer (you report income when...

AmyT — Tue, 04 Jun 2019 20:06:52 GMT

If you are a cash-basis taxpayer (you report income when it is received and expenses when they are paid), then you will only include the amounts actually received during the year in your income.

Note: Most schedule C filers are cash-basis taxpayers.

Please make sure that you keep very good records, as you will need to report payments received in future years in the year that they are received.

Re: If you are a cash-basis taxpayer (you report income when...

Carol1022 — Sat, 23 Sep 2023 16:32:10 GMT

This did not answer the question at all. How does a cash basis taxpayer account for an installment sale of his inventory (cars). He cannot use the 6252 and if he reports his annual payments as sales how does he apply them to the note receivable and also remove the sold car from inventory?

Re: If you are a cash-basis taxpayer (you report income when...

Anonymous_ — Sat, 23 Sep 2023 17:35:07 GMT

See https://www.irs.gov/publications/p537#en_US_2022_publink1000221693

Inventory.

The sale of inventories of personal property can’t be reported on the installment method. All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years.

If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. If you don’t, each payment must be allocated between the inventory and the other assets sold.

Report the amount you receive (or will receive) on the sale of inventory items as ordinary business income. Use your basis in the inventory to figure the cost of goods sold. Deduct the part of the selling expenses allocated to inventory as an ordinary business expense.