How can I report the reduced sales price for installments sale (first payment was made in the previous year)? Can this be done in Turbotax?

[sergeik]

How form 6252 should be changed compared to the non-adjusted sale price?

Part I says "Complete this part for the year of sale only". However, if not filling, there is no good place to report the reduced price. Publication 537 says to complete Worksheet B. However, it seems to be for personal use and need not be reported to IRS.

[Critter]

You do not reduce the selling price on the 6252 to reflect the prior year payment ... in years after the sale you only enter the payment made split into principal & interest portions.

[Critter]

review part 2 to see what is needed .... then follow the screen instructions carefully....   <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f6252.pdf">https://www.irs.gov/pub/irs-pdf/f6252.pdf</a>   

[sergeik]

I'm confused. I've seen the f6252.pdf. The instructions say "Additional Information
See Pub. 537 for additional information,
including details about reductions in
selling price, the single sale of several
assets, like-kind exchanges, dispositions
of installment obligations, and
repossessions."
p537 says how to recompute the reduced price using Worksheet B
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p537">https://www.irs.gov/publications/p537</a> (find Selling Price Reduced there)
But it doesn't say how to report it with 6252.
Are you saying that I should skip Part I, Adjust the gross profit percentage (line 19), and just report the new installment?

[Critter]

If this is NOT the year of sale then you ONLY complete part 2 ... you posted that rule in your question : Part I says "Complete this part for the year of sale only"

[Critter]

I think you are confused by the terminology ... a reduced sale price happens if you renegotiate the sale price after the sale ... this has nothing to do with a current payment program where the terms of the sale was not changed.

[sergeik]

I'm not confused by terminology. This is exactly my original question: how to proceed after the principal has been reduced due to renegotiated price. The first installment has been received in 2017. In 2018 the price has been renegotiated (lowered) and later the second installment has been received. No more renegotiations are expected. The last installment is expected in 2019.

[Critter]

Ok ... sorry I misunderstood your question ... not a common one in this forum ... so you will not use the forwarded form 6252 from the prior tax year if it was transferred and only use a new 6252 form ... and you have to do all the math to recalculate the selling price as the program will not help you in this matter ... use the worksheets in the IRS pub if needed.

[sergeik]

Thank you!

[sergeik]

Can you also advise how to proceed with unstated interest? Do I understand correctly that as the interest in my case is unstated, I have to use AFR as the calculated rate and allocate part of the second and third installment as unstated interest? This reduces the sale price for tax purposes by the amount of interest. I use the published AFR for the month when the payment happened. It remains constant throughout the following years. I report the unstated interest on Schedule B.

[Critter]

First that was unwise to not have stated interest on the sale...but since you did follow the IRS rules on this matter.

[sergeik]

Starting the tax year 2019 the Part I in 6252 must be filled every year. Does anyone know how to report adjusted Gross Profit Percentage after reduced price in the following years? Turbotax automatically uses Part I to fill Line 19. Also, it doesn't allow to keep Part I empty unlike the Turbotax 2018.