Installment Sales

[drb0101]

I sold my business last year on an installment sale.  I filed my business taxes (as a last filing) using TT Business.  In the process I filled out  form 6252 for 51 individule assets for the first year of the installment sale.  This year I have to report payments and gains for the second year of the installment sale using TT Deluxe for my 1040.  I assumed I needed to do another 51 iterations for form 6252 for the second year.  However TT Deluxe imposes a maximun limit of 25 entries.  What do I do?

[tagteam]

How was this sale handled, exactly, and did you prepare a return for an entity in TurboTax Business?

[Mike9241]

what type of entity owned the business and was the business liquidated?  

[drb0101]

I am not sure what you mean by how was it handled.  I have used Turbo Tax Business for my business for over a decade.  I filed my 2020 taxes indicating that 2020 would be my final filing year.  The busines is gone.  The 51 form 6252's were the result of disposing of all the assets of the business that was or once was on my depreciation documents for the business.  As you can imagine there were multiple cases of acquisition dates and a couple different disposal. dates.  So now in the second year of the installment sale I have to report the income/gains for the second year payments on my 1040.  The problem is that Turbo Tax Deluxe only allows 25 entries so I have reported less than half of the paymenst so far.  Am I making this too complicated?  Is it as simple as treating it as one composite sale on my 1040 for the balance of the installment period?

[drb0101]

The business was set up as an LLC and yes all assets were sold to the new owners.

[Mike9241]

you say you filed 2020 using Turbotax Business. that app is only for a Partnership, S-Corp, C-Corp, Multimember LLC, Trust or Estate.   a single-member LLC does not file its own business return. the business gets reported directly on the taxpayers 1040.  An LLC can elect to be taxed as an S-Corp or C-Corp.  A multimember LLC files form 1065. so what type of return was filed for 2020. the 2020 return should also have had form 8594 - an asset allocation statement.

the reason I'm asking, is that in certain situations the distribution of the installment sale obligations by the selling entity to the owners of the selling entity can result in the requirement to immediately recognize the deferred gain.

[drb0101]

A Multi-member LLC.  Me and my wife.  I did all the 6252 forms and we took a huge hit on our form 4797 net gain.  From what I can see everything going forward is simple capital gains so it seems as if I can handle everything on a single 6252 in the 1040 for "Sale of Business in Prior Year".

[DianeW777]

Yes, that is correct.  When an installment sale occurs all of the depreciation is required to be recaptured in the year of sale.  For this reason all future collections, if applicable, will be capital gain.  The Form 6252 is used each year, which then carries the gain to the appropriate schedule, until the sale is complete.

[drb0101]

So I can handle it with a single Form 6252 for the whole of the business?

[DianeW777 · Accepted solution]

Yes, if it's one sale, to one buyer, there is only one Form 6252 used in the tax return. The following links are available for your convenience.

• What is IRS Form 6252: Installment Sale Income?

• IRS Form 6252

• IRS Publication 537

[tagteam]

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@drb0101 wrote:

So I can handle it with a single Form 6252 for the whole of the business?

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Did you note @Mike9241's statement about Form 8594?

[drb0101]

Thank you so much!!

[drb0101]

I did see  @Mike9241's statement about Form 8594.  i did not see how that particular reference was germain to my basic question however.  DianeW777 zeroed in on the essence of my question with her responses.