Gain on repossession installment sale

romt — Wed, 11 Feb 2026 10:57:30 GMT

I sold a lot to my son last year- installment sale 5000 down. This year his mind changed(mutually fine) so I will do a repossession per cpa advice. I paid 2500 capital gains last year so I will pay the other 2500 capital gains this filing season. How and where do I report this on Turbotax? Original installment was reported on 6252. thanks

Re: Gain on repossession installment sale

Mike9241 — Fri, 01 Nov 2024 19:27:55 GMT

I assume the sale price was at fair value. you must recognize gain to the extent that the amount received before the repossession exceeds the gain already reported (IRC 1038). the repossession gain is limited to the initial gain on sale (as if no installment sale), reduced by gain already reported as income and any repossession costs.

your new basis equals the adjusted basis of the debt at the time of repossession, plus any repossession gain recognized., plus any repossession costs. the repossession gain retains the same character as the profit from the original sale.

here's an example

payments received before repossession
prior gain reported
line 1 less line 2
gross profit on sale - sales price less tax basis of property sold
prior gain reported
repossession costs + prior gain reported
line 4 less line 6 (not less than zero)
taxable gain (lesser of line 3 or 7)
unpaid balance
unrealized profit (line 9 times gross profit %)
adjusted basis on the date of repossession line 9 less 10
taxable gain from line 8
repossession costs
basis of repossessed property line sum of lines 11 through 13

topic Gain on repossession installment sale in Investors & landlords

Gain on repossession installment sale

Re: Gain on repossession installment sale