You would include it on Form 6252, Installment Sale.
When you sell
something for more than you paid for it, you report the income on your taxes
for the year in which the sale took place. Sometimes, though, the buyer spreads
the payments out over more than one year. In that case, it’s what the Internal
Revenue Service (IRS) refers to as an “installment sale.” Taxpayers use Form
6252 to report income from installment sales.
Form 6252 helps you
figure out how much of the money you received during a given tax year was a
return of capital, how much was a gain and how much was interest.
When you fill out
Form 6252, TurboTax will automatically carry this year's portion of the gain to
Form 4797. It will also carry the interest portion that you entered to Schedule
B and a Seller-Financed Interest Statement for Filing.
If the bank account that held any Installment
payments paid any interest on the money held in that account during the year,
that will be a separate 1099-Interest entry.
Here's how to enter Form 6252:
- Open (continue) your return
in TurboTax, if it's not already open.
- In the search box, search for
6252 and then click the "Jump to" link in the
search results.
- Follow the prompts. TurboTax
will create your Form 6252.
Sale and Later Disposition/Related Party
Generally, a special rule applies if you sell or exchange property to a related person on the installment method (first disposition) who then sells, exchanges, or gives away the property (second disposition) under the following circumstances.
The related person makes the second disposition before making all payments on the first disposition.
The related person disposes of the property within 2 years of the first disposition. This rule doesn’t apply if the property involved is marketable securities.
Under this rule, you treat part or all of the amount the related person realizes (or the FMV if the disposed property isn’t sold or exchanged) from the second disposition as if you received it at the time of the second disposition.
https://www.irs.gov/publications/p537#en_US_2018_publink1000221676
