report Seller-financed mortgage on 1065 return

[gkaufman3]

Used an accountant to prepare 1065 in 2023. He filed a 6252 for an installment sale. There is a seller-financed mortgage. I am doing the return myself this year, but  line 7 (Other Income) produces a self-employment tax, and Schedule K line 5 is only for bank interest and such.  So where does it go ?

[ThomasM125]

You need to report the installment sale income on Form 6252 "Installment sale Income". As such, the gain will populate on Form 1065, page 5 as capital gain or section 1231 gain on sale of business or personal assets. As such, the gain will not be subject to self-employment tax. I believe you are reporting the sale as "Other Income" in error. 

[user17755779361]

The original 6252 was filed by accountant in 2023.  It is not part of my history in TT software.  I tried to fill out another one stating the original sale date, but it does not ask about interest arrangements and seems to do nothing for the return. So, stuck.  Thinking I may have to report it on personal return.

[user17755779361]

The original 6252 was filed by accountant in 2023.  It is not part of my history in TT software.  I tried to fill out another one stating the original sale date, but it does not ask about interest arrangements and seems to do nothing for the return. So, stuck.  Thinking I may have to report it on personal return.

[PatriciaV]

Depending on the type of installment sale you need to report on Form 1065, you may be able to enter this under Rental Real Estate, which has a step-by-step interview for the installment sale of rental assets. 

Otherwise, the principal portion of the installment payments received during the year should be entered as Ordinary Income for Form 1065 Line 1(a). If you choose to enter Service Receipts by Category, you can add your own description for the principal amount. Entries under this topic go to Line 1(a).

The interest income from the installment sale should be reported under Interest and Dividend Income for Line 5. This topic includes interest from Banks, CDs, etc. (which includes all interest from investments). Only interest earned from trade or business operations is reported under Other Business Income.