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It's somewhat complicated and I'm pretty sure that TurboTax doesn't have an "interview" for your situation. I think you'll either have to figure it out on your own, using the worksheets in Pub 537
https://www.irs.gov/publications/p537/ar02.html#en_US_2015_publink1000221736
and then enter information via "Forms" method - not available through the online products - or have someone else prepare your income tax return this year.
Here's the relevant "verbiage" of Pub 537:
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Repossession
If you repossess your property after making an installment sale, you must figure the following amounts.
Your gain (or loss) on the repossession.
Your basis in the repossessed property.
The rules for figuring these amounts depend on the kind of property you repossess. The rules for repossessions of personal property differ from those for real property. Special rules may apply if you repossess property that was your main home before the sale. See Regulations section 1.1038-2 for further information.
The repossession rules apply whether or not title to the property was ever transferred to the buyer. It does not matter how you repossess the property, whether you foreclose or the buyer voluntarily surrenders the property to you. However, it is not a repossession if the buyer puts the property up for sale and you repurchase it.
For the repossession rules to apply, the repossession must at least partially discharge (satisfy) the buyer's installment obligation to you. The discharged obligation must be secured by the property you repossess. This requirement is met if the property is auctioned off after you foreclose and you apply the installment obligation to your bid price at the auction.
Reporting the repossession. 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.
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Real Property
The rules for the repossession of real property allow you to keep essentially the same adjusted basis in the repossessed property you had before the original sale. You can recover this entire adjusted basis when you resell the property. This, in effect, cancels out the tax treatment that applied to you on the original sale and puts you in the same tax position you were in before that sale.
As a result, the total payments you have received from the buyer on the original sale must be considered income to you. You report, as gain on the repossession, any part of the payments you have not yet included in income. These payments are amounts you previously treated as a return of your adjusted basis and excluded from income. However, the total gain you report is limited. See Limit on taxable gain , later.
Mandatory rules. The rules concerning basis and gain on repossessed real property are mandatory. You must use them to figure your basis in the repossessed real property and your gain on the repossession. They apply whether or not you reported the sale on the installment method. However, they apply only if all of the following conditions are met.
The repossession must be to protect your security rights in the property.
The installment obligation satisfied by the repossession must have been received in the original sale.
You cannot pay any additional consideration to the buyer to get your property back unless either of the situations listed below applies.
The requisition and payment of the additional consideration were provided for in the original contract of sale.
The buyer has defaulted, or default is imminent.
Additional consideration includes money and other property you pay or transfer to the buyer. For example, additional consideration is paid if you reacquire the property subject to a debt that arose after the original sale.
Conditions not met. If any one of these three conditions is not met, use the rules discussed under Personal Property , earlier, as if the property you repossess were personal rather than real property. Do not use the rules for real property.
Figuring gain on repossession. Your gain on repossession is the difference between the following amounts.
The total payments received, or considered received, on the sale.
The total gain already reported as income.
See the earlier discussions under Payments Received or Considered Received for items considered payment on the sale.
Limit on taxable gain. Taxable gain is limited to your gross profit on the original sale minus the sum of the following amounts.
The gain on the sale you reported as income before the repossession.
Your repossession costs.
This method of figuring taxable gain, in essence, treats all payments received on the sale as income but limits your total taxable gain to the gross profit you originally expected on the sale.
Indefinite selling price. The limit on taxable gain does not apply if the selling price is indefinite and cannot be determined at the time of repossession. For example, a selling price stated as a percentage of the profits to be realized from the buyer's development of the property is an indefinite selling price.
Character of gain. The taxable gain on repossession is ordinary income or capital gain, the same as the gain on the original sale. However, if you did not report the sale on the installment method, the gain is ordinary income.
Repossession costs. Your repossession costs include money or property you pay to reacquire the real property. This includes amounts paid to the buyer of the property, as well as amounts paid to others for such items as those listed below.
Court costs and legal fees.
Publishing, acquiring, filing, or recording of title.
Lien clearance.
Repossession costs do not include the FMV of the buyer's obligations to you that are secured by the real property or the costs of reacquiring those obligations.
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