1099 S and 6252

[USER987456]

Have a few acres of pasture land that we sold in an installment sale last year, on a 5 year payment schedule with the seller. The title company handling the sale sent a 1099 S for the entire sale amount. I was under the impress that I report this sale on 6252 as an installment sale, what is the correct way to report this? Thank you

[DianeW777]

Yes. If you are selling property and there is a gain, you have the option of reporting it on installment (Form 6252).

• How do I report an installment sale in TurboTax?
• What is an installment sale?

Some items to consider. 

• If this was business use property at any time, then depreciation would be recaptured in the year of sale. If there is gain above the depreciation amount the rest can be reported on installment.
• Have an amortization schedule prepared so you have the interest income amount each year. The buyer should issue you a 1099-INT however you should be prepared with the interest income.
• If this happens to be your home, you may not need to do that if you meet the home sale exclusion rules.

Key Eligibility Requirements: IRS Publication 523

1. Ownership: If you owned the home for at least 24 months (2 years) out of the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement. For a married couple filing jointly, only one spouse has to meet the ownership requirement.
2. Use: If you owned the home and used it as your residence for at least 24 months of the previous 5 years, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period, and it doesn't have to be a single block of time. All that is required is a total of 24 months (730 days) of residence during the 5-year period. Unlike the ownership requirement, each spouse must meet the residence requirement individually for a married couple filing jointly to get the full exclusion.
3. Look Back Period: If you didn't sell another home during the 2-year period before the date of sale (or, if you did sell another home during this period, but didn't take an exclusion of the gain earned from it), you meet the look-back requirement. You may take the exclusion only once during a 2-year period.
4. Exceptions - May not apply to you and can be reviewed at the link above.

[USER987456]

Not making very much profit from this sale at all, though there is %5 interest on the sale over the course of 5 years... Does this necessitate an installment sale to report interest or can I just report the 1099 S this year and include the interest by itself in subsequent years? Thank you

[Vanessa A]

No.  You do not HAVE to do the installment sale.  

Yes. You can choose to report the entire sale this year and then include the subsequent years report the interest when it is received. 

Installment sale. An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. If you realize a gain on an installment sale, you may be able to report part of your gain when you receive each payment. This method of reporting gain is called the installment method. You can’t use the installment method to report a loss. You can choose to report all of your gain in the year of sale.

[USER987456]

How do I report the investment interest income for the land sale for the next 5 years, just put on 1099 Int manual entry?

[PatriciaV]

Interest from an installment sale is reported as ordinary income in the same manner as any other interest income. You don't need FORM 1099-INT to report this income.

The easiest way to find this topic in TurboTax Online is to use Tax Tools in the left column >> Tools >> Topic Search. Type in "interest income", click the topic in the list, then Go. In TurboTax Desktop, use the Search box or Topic List found in the header.