Form 6252

Forum|Forum|1 year ago
March 19, 2025
1 reply
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I have a Form 6252 in 2024 from an installment sale from a prior year. No principle amount was received. Line 24 on Form 6252 Installment Sale Income appropriately shows zero. However, Line 25 (the part of line 24 that is ordinary income) has a positive amount. It should also be zero, correct? How can I correct this error.

Ask the Experts - Changes II - Mar 2025

SharonD007

Level 14

It depends. That number is from depreciation recapture from the sale of depreciable property from your previous year sale. Did you take depreciation in the asset that you sold before your sold it?

Refer to the TurboTax article Depreciation Recapture: Definition, Calculation, and Examples for more information.

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ConniecAuthor

Level 2

Yes. Depreciation was taken but it was all straight-line method and the property was held for more than one year.

KrisD15

Level 15

Depreciation needs to be "recaptured" the year of sale.

According to the IRS

"If you sell property for which you claimed or could have claimed a depreciation deduction, you must report any depreciation recapture income in the year of sale, whether or not an installment payment was received that year. Figure your depreciation recapture income (including the section 179 deduction and the section 179A deduction recapture) in Part III of Form 4797. Report the recapture income in Part II of Form 4797 as ordinary income in the year of sale. The recapture income is also included in Part I of Form 6252. However, the gain equal to the recapture income is reported in full in the year of the sale. Only the gain greater than the recapture income is reported on the installment method. For more information on depreciation recapture, see chapter 3 of Pub. 544.

The recapture income reported in the year of sale is included in your installment sale basis in determining your gross profit on the installment sale."

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