How can TurboTax compute my Installment Sale Income to be $102,048 when the sales price was $120,000 and the note carried back was $110,000. Asset held for 38 years

[TaxGuyBill]

Yeah, I noticed that too, but there's not much you can do about that now.

[Anonymous]

https://www.investopedia.com/terms/u/unrecaptured-1250-gain.asp

Example of 'Unrecaptured Section 1250 Gains'

If a property was initially purchased for $150,000, and the owner claims a depreciation of $30,000, the basis for the property is considered to be $120,000. If the property is subsequently sold for $185,000, the owner has received an overall gain of $65,000 over the basis value. Since the property has sold for more than the basis that had been adjusted for depreciation, the initial gains are recaptured based on the original purchase price of $150,000. This makes the first $30,000 of the profit subject to the unrecaptured section 1250 gain, while the remaining $35,000 is considered regular long-term capital gains. With that result, $30,000 would be subject to the higher capital gains tax rate of up to 25%. The remaining $35,000 would be taxed at the long-term capital gains rate of 15%.

if you still disagree with my answer take it up with Turbotax because they are the only ones that can change the programming. 

[TaxGuyBill]

TurboTax does it correctly.  It does not immediately tax all of the Unrecaptured Section 1250 Gain, as that is not "recapture".

The taxable amount of the installment sale is FIRST applied to the Section 1250 Gain.  Eventually, when enough taxable portion of the principal payments of the Installment Sate have been made to 'pay off' the Unrecaptured Section 1250 Gain, then the rest of the taxable payments is applied to Long-Term Capital Gain.

[Anonymous]

I apologize. you are right about the 4797 . however see line 19 of schedule D   this is where the depreciation recapture is shown 

the issue is line 6.  did the buyer assume a mortgage on the property in the amount of $110,000.  The way you explain it, this is the amount of installment principal you will be receiving and there was no mortgage on the property that the buyer assumed .  if correct line 6 should be $0.     also if you sold for $120K and took a note for $110K, you would have gotten a down payment of $10K.  the $10K plus any installment principal payments would go on  line 21