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Dear Employee Tax Expert, @MarilynG1 , I am in the same situation as the original poster, in that I have been filling out Form 6252 for over 20 years now and this year, tax year 2019, the instructions and thus requirements of the form, have changed from previous years.
I was considering purchasing the Live Review feature of TurboTax to get help with this problem, as you suggested, but I wanted to first try and find out if, after purchasing the Live Review feature of TurboTax, the person would even be able to help me with this question. Or if I should instead go into an office like H&R Block.
I am new to these TurboTax forums, so I don't know what the title of "Employee Tax Expert" means next to your name. Do you actually work for Intuit? Would you be the type of person we would get if we bought and used the Live Review feature?
The reason I ask is because you did not appear to read or research the original poster's question very carefully before posting an answer. If you go to IRS Form 6252 Past Years and download the 2018 version, you will see, as was mentioned by the original poster, that Part I states:
"Complete this part for the year of sale only."
If you then download the 2019 version, you will see that Part I now states:
"Complete this part for all years of the installment agreement."
If you are an Intuit employee or in any other way associated with them, or you are one of the CPAs/EAs that we may get when purchasing and using the Live Review feature, would you mind adding additional information to your profile or attach/include a signature value with each of your posts stating what you are.
On other people's profiles, I do see things like "CPA" and "Enrolled Agent with over 40 years of tax experience".
But on your profile, I don't see anything:
If you are just a friendly customer trying to help out another customer, I appreciate your time and effort, but again would ask that you please update your profile or include a signature value with each of your posts stating that you are not a CPA or EA and are just trying to offer friendly advice.
Thank you.
The IRS changed Form 6252 between 2018 and 2019. You are now required to complete Part 1 each year. Part I includes all of the details of the sale.
This creates a problem for people that sold property on an installment sale years ago, and no longer have that information.
There is a way to work around this problem, as long as you know the gross profit percentage on the sale. This information should be on Part II line 19 of your 2018 Form 6252.
As long as you enter the correct gross profit percentage, and you don’t indicate that you have already received all of your principal back in prior years, TurboTax will compute the taxable portion of your principal received in 2019 correctly.
Here is how to enter a prior year installment sale in TurboTax when you don’t know the selling price or basis.
Go back and edit the installment sale.
The first screen is Property Description
Under selling price and basis enter two numbers that create a gross profit equal to the gross profit percentage on the original sale. For instance, if the gross profit percentage was 30%, enter $100,000 for the price and $70,000 for the basis.
The next screen is Let's get the details of your rental sale
Here you enter your gross profit percentage and the amount of principal paid to you in prior years. If you don’t indicate that you have already received all of your principal back in prior years, TurboTax will compute the taxable portion of your principal received in 2019 correctly.
A few screens later you will enter your principal and interest received, here you enter the actual figures.
The dollar amount of the installment sale will not show, but it will be entered on Schedule D.
@RobertG's reply is pretty good. I can try giving another example. But first, a disclaimer that I am not a tax professional of any kind.
Do you know any other information about the installment sale? For example, do you know the sale price? If not, that's OK, I didn't know mine either, but I will tell you how I came up with a value.
Second question, do you know the total amount of payments received in prior years? I believe you should have this information as it is what we've always had to put down on Line 23 of Form 6252 in years past.
Next questions, is this the first year you are receiving payments? Or is this the last year that you'll be receiving payments? Or are you somewhere in between and you are now having to go through this process after the IRS changed it for tax year 2019?
If this is neither your first year, nor last year, then I can probably help, as that is the situation I'm in.
So, what I did first was to make a best guess at the sale price. I was able to do this knowing/guessing a few other pieces of information. First, I know the monthly payment amount I get. In my case $1,035.88. Second, the interest rate of the loan. On one of the forms I get each year from the buyer it says, "The minimum interest rate of 7.5% still applies." And lastly, I believe the payments are for 30 years. So all I did was go to an online mortgage calculator and set the term to 30 years, the interest rate to 7.5% and then started changing the loan amount until it showed a monthly payment of $1,035.88. In my case, that came to $147,944, or that was close enough.
Enter the sale price value on Line 5, Line 7, and Line 18.
Next, given that you know the Gross Profit Percentage, we know that the Gross Profit Percentage comes from dividing the Gross Profit (Line 16) by the Contract Price (Line 18). In my case, my Gross Profit Percentage is 0.9442 and my Line 18 is the sales price of $147,944. Therefore, Line 16 would be equal to $147,944 * 0.9442 = $139,688. This value is also used on Line 14. And since the instructions for calculating Line 14 say, "Subtract line 13 from line 5", we can compute Line 13 as our sales price minus the value we calculated for Line 18. In my example, Line 13 is equal to $147,944 - $139,688 = $8,256. You can then use that value as your Cost Basis on Line 8 (as well as on Line 10).
Here is a screen shot of that section of my Form 6252.
You may notice that a couple of the numbers are slightly off from the calculations I gave above. That is just some rounding error due to me not rounding the percentage. The point is, you're numbers don't have to be perfect either, it should be OK, the IRS isn't going to penalize you for it.
However, do be sure to review the forms before submitting your return to the IRS. Compare them to last year and make sure there aren't any big differences. The values you enter for the sales price and cost basis, no matter what they are, shouldn't change what you would otherwise typically pay in taxes. The IRS is just trying to gather more information. But again, that statement and this example are only if this is not the first year nor last year of the installment sale.
As for how to get all of this into TurboTax, I do not know. I struggle/fight with it each year. Review RobertG's post and screen shots again and see if you can get it.
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