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Hr Block Free Efile

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Hr Block Free Efile

Hr block free efile Part Five -   Deducción Estándar y Deducciones Detalladas Después de calcular su ingreso bruto ajustado, entonces puede restar las deducciones utilizadas para calcular los ingresos tributables. Hr block free efile Puede restar la deducción estándar o las deducciones detalladas. Hr block free efile Las deducciones detalladas son deducciones por determinados gastos enumerados en el Anexo A (Formulario 1040). Hr block free efile Los diez capítulos de esta sección tratan sobre la deducción estándar, cada deducción detallada y el límite sobre algunas de sus deducciones detalladas si su ingreso bruto ajustado es mayor que ciertas cantidades. Hr block free efile Vea el capítulo 20 para saber qué factores debe tener en cuenta al decidir si debe restar o no la deducción estándar o las deducciones detalladas. Hr block free efile Table of Contents 20. Hr block free efile   Deducción EstándarQué Hay de Nuevo Introduction Cantidad de la Deducción Estándar Deducción Estándar para DependientesDefinición del ingreso del trabajo. Hr block free efile Quién Debe Detallar las DeduccionesCuándo detallar las deducciones. Hr block free efile Personas casadas que presentan la declaración por separado. Hr block free efile 21. Hr block free efile   Gastos Médicos y DentalesQué Hay de Nuevo Introduction Useful Items - You may want to see: ¿Qué Son Gastos Médicos? ¿Qué Gastos Puede Incluir Este Año?Estados donde rige la ley de los bienes gananciales. Hr block free efile ¿Qué Cantidad de los Gastos Puede Deducir? ¿De Qué Personas Puede Incluir Gastos Médicos?Usted Cónyuge Dependiente Difuntos ¿Qué Gastos Médicos se Pueden Incluir?Primas de Seguros Comidas y Alojamiento Transporte Gastos del Cuidado de un Dependiente Incapacitado ¿Cómo se Tratan los Reembolsos?Reembolso de Seguros Indemnizaciones por Lesiones Personales Cómo Calcular y Reclamar la Deducción en su Declaración de Impuestos¿Qué Formulario Debe Usar para la Declaración? Gastos de Trabajo Relacionados con un Impedimento Costos del Seguro Médico para Personas que Trabajan por Cuenta Propia 22. Hr block free efile   ImpuestosIntroductionGobierno tribal de indios estadounidenses. Hr block free efile Useful Items - You may want to see: Requisitos para Deducir Todo Impuesto Impuestos sobre los IngresosImpuestos Estatales y Locales sobre los Ingresos Impuestos Extranjeros sobre los Ingresos Impuestos Generales sobre las VentasVehículos de motor. Hr block free efile Impuestos sobre Bienes RaícesImpuestos sobre bienes raíces de años anteriores. Hr block free efile Ejemplos. Hr block free efile Formulario 1099-S. Hr block free efile Cantidades Relacionadas con Bienes Raíces que no Puede Deducir Impuestos sobre Bienes Muebles Impuestos y Cargos que no Puede Deducir Dónde se Anotan las Deducciones 23. Hr block free efile   Gastos de InteresesIntroduction Useful Items - You may want to see: Intereses Hipotecarios de ViviendaCantidad Deducible Puntos Primas de Seguro Hipotecario Formulario 1098, Estado de Cuenta de los Intereses Hipotecarios Intereses Procedentes de InversionesBienes de Inversión Asignación de Gastos de Intereses Límite sobre la Deducción Cantidades que No Puede DeducirIntereses Personales Asignación de Intereses Cómo Hacer la DeclaraciónMás de un prestatario. Hr block free efile Fondos procedentes de una hipoteca utilizados para negocios o inversiones. Hr block free efile 24. Hr block free efile   DonacionesIntroduction Useful Items - You may want to see: Organizaciones que Reúnen los Requisitos para Recibir Donaciones DeduciblesTipos de Organizaciones Calificadas Donaciones que Puede DeducirDonaciones de las Cuales Usted se Beneficia Gastos Pagados a Nombre de un Estudiante que Vive con Usted Gastos de Bolsillo al Prestar Servicios Donaciones que no Puede DeducirDonaciones Hechas a Personas Físicas Donaciones Hechas a Organizaciones no Calificadas Donaciones de las Cuales Usted se Beneficia Valor de Tiempo o Servicios Gastos Personales Cargos de Tasación Donaciones de BienesExcepción. Hr block free efile Artículos domésticos. Hr block free efile Deducción de más de $500. Hr block free efile Formulario 1098-C. Hr block free efile Se acerca el plazo para la presentación de la declaración y aún no tiene el Formulario 1098-C. Hr block free efile Excepción 1: vehículo usado o mejorado por la organización. Hr block free efile Excepción 2: vehículo donado o vendido a una persona necesitada. Hr block free efile Deducción de $500 o menos. Hr block free efile Derecho al uso de los bienes. Hr block free efile Bienes muebles tangibles. Hr block free efile Intereses futuros. Hr block free efile Determinación del Valor Justo de Mercado Donación de Bienes Cuyo Valor ha Disminuido Donación de Bienes Cuyo Valor ha Aumentado Cuándo Puede Deducir sus DonacionesCheques. Hr block free efile Mensaje de texto. Hr block free efile Tarjeta de crédito. Hr block free efile Pago telefónico. Hr block free efile Título de acciones. Hr block free efile Pagaré. Hr block free efile Opción. Hr block free efile Fondos de un préstamo. Hr block free efile Límites sobre DeduccionesCantidades Trasladadas al Año Siguiente Documentación que se Debe MantenerDonaciones en Efectivo Donaciones que no Sean en Efectivo Gastos de Bolsillo Cómo Declarar las Donaciones Caritativas 25. Hr block free efile   Pérdidas por Hecho Fortuito y Robo no Relacionadas con los NegociosQué Hay de Nuevo Introduction Useful Items - You may want to see: Hecho FortuitoMascota de la familia. Hr block free efile Deterioro progresivo. Hr block free efile Daños ocasionados por paneles de yeso (drywall) corrosivos. Hr block free efile Robo Pérdidas de Depósitos Comprobación de las Pérdidas Cómo Calcular una PérdidaDisminución del Valor Justo de Mercado Base Ajustada Seguro y Otros Reembolsos Un Solo Hecho Fortuito en Bienes Múltiples Límites de la DeducciónRegla de los $100 Regla del 10% Cuándo Declarar Ganancias y PérdidasPérdidas en Zonas de Desastre Cómo Declarar Ganancias y Pérdidas 26. Hr block free efile   Gastos de Automóvil y Otros Gastos de Negocio del EmpleadoQué Hay de Nuevo Introduction Useful Items - You may want to see: Gastos de ViajeViajes Lejos de Su Domicilio Domicilio Tributario Trabajo o Asignación Temporal ¿Qué Gastos de Viaje se Pueden Deducir? Viajes en los Estados Unidos Viajes Fuera de los Estados Unidos Convenciones Gastos de EntretenimientoLímite del 50% ¿Qué Gastos de Entretenimiento se Pueden Deducir? ¿Qué Gastos de Entretenimiento no se Pueden Deducir? Gastos por Regalos Gastos de TransportePersonal en Reserva de las Fuerzas Armadas. Hr block free efile Cargos de estacionamiento. Hr block free efile Publicidad en el automóvil. Hr block free efile Uso compartido de automóviles. Hr block free efile Transporte de herramientas o instrumentos. Hr block free efile Gastos de desplazamiento de sindicalistas desde el centro del sindicato. Hr block free efile Gastos de Automóvil Mantenimiento de DocumentaciónCómo Demostrar los Gastos Cuánto Tiempo Tiene que Guardar Documentación y Recibos Cómo Hacer la DeclaraciónRegalos. Hr block free efile Empleados estatutarios. Hr block free efile Reembolsos Cómo Llenar los Formularios 2106 y 2106-EZ Reglas Especiales 27. Hr block free efile   Beneficios Tributarios para Estudios Relacionados con el TrabajoQué Hay de Nuevo Introduction Useful Items - You may want to see: Estudios Relacionados con el Trabajo que Reúnen los Requisitos de la DeducciónEstudios Requeridos por el Empleador o por Ley Estudios para Mantener o Mejorar Destrezas Estudios para Satisfacer los Requisitos Mínimos Estudios que lo Capacitan para un Nuevo Oficio o Negocio Qué Gastos se Pueden Deducir Reembolso no reclamado. Hr block free efile Gastos de Transporte Gastos de Viaje No se Permiten Beneficios Dobles Reembolsos Cómo Deducir Gastos de NegociosPersonas que Trabajan por Cuenta Propia Empleados Artistas del Espectáculo y Funcionarios a los que se les Pagan Honorarios Gastos de Trabajo Relacionados con un Impedimento Documentación 28. Hr block free efile   Deducciones MisceláneasQué Hay de Nuevo Introduction Useful Items - You may want to see: Deducciones Sujetas al Límite del 2%Gastos del Empleado no Reembolsados (Línea 21) Costos de la Preparación de la Declaración de Impuestos (Línea 22) Otros Gastos (Línea 23) Deducciones no Sujetas al Límite del 2%Lista de Deducciones Gastos no DeduciblesLista de Gastos no Deducibles 29. Hr block free efile   Límite sobre Deducciones DetalladasIntroduction Useful Items - You may want to see: ¿Está Usted Sujeto al Límite? ¿Qué Deducciones Detalladas Están Limitadas? ¿Qué Deducciones Detalladas no Están Limitadas? ¿Cómo se Calcula el Límite?Ejemplo Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

South Carolina Department of Consumer Affairs

Website: South Carolina Department of Consumer Affairs

Address: South Carolina Department of Consumer Affairs
PO Box 5757
Columbia, SC 29250

Phone Number: 803-734-4200

Toll-free: 1-800-922-1594 (SC)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Office of the Commissioner of Banking

Website: Office of the Commissioner of Banking

Address: Office of the Commissioner of Banking
State Board of Financial Institutions
1205 Pendleton St., Suite 305
Columbia, SC 29201

Phone Number: 803-734-2001

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Department of Insurance

Website: Department of Insurance

Address: Department of Insurance
Consumer Services
PO Box 100105
Columbia, SC 29202-3105

Phone Number: 803-737-6180

Toll-free: 1-800-768-3467 (SC)

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Office of the Attorney General

Website: Office of the Attorney General

Address: Office of the Attorney General
Securities Division
PO Box 11549
Columbia, SC 29211-1549

Phone Number: 803-734-9916

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Office of Regulatory Staff

Website: Office of Regulatory Staff

Address: Office of Regulatory Staff
Consumer Services Division
1401 Main St., Suite 900
Columbia, SC 29201

Phone Number: 803-737-5230

Toll-free: 1-800-922-1531 (SC)

TTY: 1-800-334-2217 (SC)

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The Hr Block Free Efile

Hr block free efile 10. Hr block free efile   Installment Sales Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Installment Sale of a Farm Installment MethodWhen to elect out. Hr block free efile Revoking the election. Hr block free efile More information. Hr block free efile Figuring Installment Sale Income Payments Received or Considered Received ExampleSection 1231 gains. Hr block free efile Summary. Hr block free efile Introduction An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. Hr block free efile If you realize a gain on an installment sale, you may be able to report part of your gain when you receive each payment. Hr block free efile This method of reporting gain is called the installment method. Hr block free efile You cannot use the installment method to report a loss. Hr block free efile You can choose to report all of your gain in the year of sale. Hr block free efile Installment obligation. Hr block free efile   The buyer's obligation to make future payments to you can be in the form of a deed of trust, note, land contract, mortgage, or other evidence of the buyer's debt to you. Hr block free efile Topics - This chapter discusses: The general rules that apply to using the installment method Installment sale of a farm Useful Items - You may want to see: Publication 523 Selling Your Home 535 Business Expenses 537 Installment Sales 538 Accounting Periods and Methods 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income See chapter 16 for information about getting publications and forms. Hr block free efile Installment Sale of a Farm The installment sale of a farm for one overall price under a single contract is not the sale of a single asset. Hr block free efile It generally includes the sale of real property and personal property reportable on the installment method. Hr block free efile It may also include the sale of property for which you must maintain an inventory, which cannot be reported on the installment method. Hr block free efile See Inventory , later. Hr block free efile The selling price must be allocated to determine the amount received for each class of asset. Hr block free efile The tax treatment of the gain or loss on the sale of each class of assets is determined by its classification as a capital asset, as property used in the business, or as property held for sale and by the length of time the asset was held. Hr block free efile (See chapter 8 for a discussion of capital assets and chapter 9 for a discussion of property used in the business. Hr block free efile ) Separate computations must be made to figure the gain or loss for each class of asset sold. Hr block free efile See Sale of a Farm in chapter 8. Hr block free efile If you report the sale of property on the installment method, any depreciation recapture under section 1245 or 1250 of the Internal Revenue Code is generally taxable as ordinary income in the year of sale. Hr block free efile See Depreciation recapture , later. Hr block free efile This applies even if no payments are received in that year. Hr block free efile Installment Method An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. Hr block free efile A farmer who is not required to maintain an inventory can use the installment method to report gain from the sale of property used or produced in farming. Hr block free efile See Inventory , later, for information on the sale of farm property where inventory items are included in the assets sold. Hr block free efile If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you elect out of using the installment method. Hr block free efile Electing out of the installment method. Hr block free efile   If you elect not to use the installment method, you generally report the entire gain in the year of sale, even though you do not receive all the sale proceeds in that year. Hr block free efile   To make this election, do not report your sale on Form 6252. Hr block free efile Instead, report it on Schedule D (Form 1040), Form 4797, or both. Hr block free efile When to elect out. Hr block free efile   Make this election by the due date, including extensions, for filing your tax return for the year the sale takes place. Hr block free efile   However, if you timely file your tax return for the year the sale takes place without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Hr block free efile Write “Filed pursuant to section 301. Hr block free efile 9100-2” at the top of the amended return and file it where the original return was filed. Hr block free efile Revoking the election. Hr block free efile   Once made, the election can be revoked only with IRS approval. Hr block free efile A revocation is retroactive. Hr block free efile More information. Hr block free efile   See Electing Out of the Installment Method in Publication 537 for more information. Hr block free efile Inventory. Hr block free efile   The sale of farm inventory items cannot be reported on the installment method. Hr block free efile All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years. Hr block free efile   If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. Hr block free efile If you do not, each payment must be allocated between the inventory and the other assets sold. Hr block free efile Sale at a loss. Hr block free efile   If your sale results in a loss, you cannot use the installment method. Hr block free efile If the loss is on an installment sale of business assets, you can deduct it only in the tax year of sale. Hr block free efile Figuring Installment Sale Income Each payment on an installment sale usually consists of the following three parts. Hr block free efile Interest income. Hr block free efile Return of your adjusted basis in the property. Hr block free efile Gain on the sale. Hr block free efile In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. Hr block free efile You do not include in income the part that is the return of your basis in the property. Hr block free efile Basis is the amount of your investment in the property for installment sale purposes. Hr block free efile Interest income. Hr block free efile   You must report interest as ordinary income. Hr block free efile Interest is generally not included in a down payment. Hr block free efile However, you may have to treat part of each later payment as interest, even if it is not called interest in your agreement with the buyer. Hr block free efile Interest provided in the agreement is called stated interest. Hr block free efile If the agreement does not provide for enough stated interest, there may be unstated interest or original issue discount. Hr block free efile See Unstated interest , later. Hr block free efile    You must continue to report the interest income on payments you receive in subsequent years as interest income. Hr block free efile Adjusted basis and installment sale income (gain on sale). Hr block free efile   After you have determined how much of each payment to treat as interest, you treat the rest of each payment as if it were made up of two parts. Hr block free efile A tax-free return of your adjusted basis in the property, and Your gain (referred to as “installment sale income” on Form 6252). Hr block free efile Figuring adjusted basis for installment sale purposes. Hr block free efile   You can use Worksheet 10-1 to figure your adjusted basis in the property for installment sale purposes. Hr block free efile When you have completed the worksheet, you will also have determined the gross profit percentage necessary to figure your installment sale income (gain) for this year. Hr block free efile    Worksheet 10-1. Hr block free efile Figuring Adjusted Basis and Gross Profit Percentage 1. Hr block free efile Enter the selling price for the property   2. Hr block free efile Enter your adjusted basis for the property     3. Hr block free efile Enter your selling expenses     4. Hr block free efile Enter any depreciation recapture     5. Hr block free efile Add lines 2, 3, and 4. Hr block free efile  This is your adjusted basis  for installment sale purposes   6. Hr block free efile Subtract line 5 from line 1. Hr block free efile If zero or less, enter -0-. Hr block free efile  This is your gross profit     If the amount entered on line 6 is zero, Stop here. Hr block free efile You cannot use the installment method. Hr block free efile   7. Hr block free efile Enter the contract price for the property   8. Hr block free efile Divide line 6 by line 7. Hr block free efile This is your gross profit percentage   Selling price. Hr block free efile   The selling price is the total cost of the property to the buyer and includes the following. Hr block free efile Any money you are to receive. Hr block free efile The fair market value (FMV) of any property you are to receive (FMV is discussed at Property used as a payment under Payments Received or Considered Received ). Hr block free efile Any existing mortgage or other debt the buyer pays, assumes, or takes (a note, mortgage, or any other liability, such as a lien, accrued interest, or taxes you owe on the property). Hr block free efile Any of your selling expenses the buyer pays. Hr block free efile Do not include stated interest, unstated interest, any amount recomputed or recharacterized as interest, or original issue discount. Hr block free efile Adjusted basis for installment sale purposes. Hr block free efile   Your adjusted basis is the total of the following three items. Hr block free efile Adjusted basis. Hr block free efile Selling expenses. Hr block free efile Depreciation recapture. Hr block free efile Adjusted basis. Hr block free efile   Basis is your investment in the property for installment sale purposes. Hr block free efile The way you figure basis depends on how you acquire the property. Hr block free efile The basis of property you buy is generally its cost. Hr block free efile The basis of property you inherit, receive as a gift, build yourself, or receive in a tax-free exchange is figured differently. Hr block free efile   While you own property, various events may change your original basis. Hr block free efile Some events, such as adding rooms or making permanent improvements, increase basis. Hr block free efile Others, such as deductible casualty losses or depreciation previously allowed or allowable, decrease basis. Hr block free efile The result is adjusted basis. Hr block free efile See chapter 6 and Publication 551, Basis of Assets, for more information. Hr block free efile Selling expenses. Hr block free efile   Selling expenses relate to the sale of the property. Hr block free efile They include commissions, attorney fees, and any other expenses paid on the sale. Hr block free efile Selling expenses are added to the basis of the sold property. Hr block free efile Depreciation recapture. Hr block free efile   If the property you sold was depreciable property, you may need to recapture part of the gain on the sale as ordinary income. Hr block free efile See Depreciation Recapture in chapter 9 and Depreciation Recapture Income in Publication 537. Hr block free efile Gross profit. Hr block free efile   Gross profit is the total gain you report on the installment method. Hr block free efile   To figure your gross profit, subtract your adjusted basis for installment sale purposes from the selling price. Hr block free efile If the property you sold was your home, subtract from the gross profit any gain you can exclude. Hr block free efile Contract price. Hr block free efile   Contract price equals: The selling price, minus The mortgages, debts, and other liabilities assumed or taken by the buyer, plus The amount by which the mortgages, debts, and other liabilities assumed or taken by the buyer exceed your adjusted basis for installment sale purposes. Hr block free efile Gross profit percentage. Hr block free efile   A certain percentage of each payment (after subtracting interest) is reported as installment sale income. Hr block free efile This percentage is called the gross profit percentage and is figured by dividing your gross profit from the sale by the contract price. Hr block free efile   The gross profit percentage generally remains the same for each payment you receive. Hr block free efile However, see the example under Selling price reduced , later, for a situation where the gross profit percentage changes. Hr block free efile Amount to report as installment sale income. Hr block free efile   Multiply the payments you receive each year (less interest) by the gross profit percentage. Hr block free efile The result is your installment sales income for the tax year. Hr block free efile In certain circumstances, you may be treated as having received a payment, even though you received nothing directly. Hr block free efile A receipt of property or the assumption of a mortgage on the property sold may be treated as a payment. Hr block free efile For a detailed discussion, see Payments Received or Considered Received , later. Hr block free efile Selling price reduced. Hr block free efile   If the selling price is reduced at a later date, the gross profit on the sale also will change. Hr block free efile You then must refigure the gross profit percentage for the remaining payments. Hr block free efile Refigure your gross profit using Worksheet 10-2. Hr block free efile New Gross Profit Percentage — Selling Price Reduced. Hr block free efile You will spread any remaining gain over future installments. Hr block free efile    Worksheet 10-2. Hr block free efile New Gross Profit Percentage — Selling Price Reduced 1. Hr block free efile Enter the reduced selling  price for the property   2. Hr block free efile Enter your adjusted  basis for the  property     3. Hr block free efile Enter your selling  expenses     4. Hr block free efile Enter any depreciation  recapture     5. Hr block free efile Add lines 2, 3, and 4. Hr block free efile   6. Hr block free efile Subtract line 5 from line 1. Hr block free efile  This is your adjusted  gross profit   7. Hr block free efile Enter any installment sale  income reported in  prior year(s)   8. Hr block free efile Subtract line 7 from line 6   9. Hr block free efile Future installments     10. Hr block free efile Divide line 8 by line 9. Hr block free efile  This is your new  gross profit percentage*. Hr block free efile   * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. Hr block free efile Example. Hr block free efile In 2011, you sold land with a basis of $40,000 for $100,000. Hr block free efile Your gross profit was $60,000. Hr block free efile You received a $20,000 down payment and the buyer's note for $80,000. Hr block free efile The note provides for monthly payments of $1,953 each, figured at 8% interest, amortized over four years, beginning in January 2012. Hr block free efile Your gross profit percentage was 60%. Hr block free efile You received the down payment of $20,000 in 2011 and total payments of $23,436 in 2012, of which $17,675 was principal and $5,761 was interest according to the amortization schedule. Hr block free efile You reported a gain of $12,000 on the down payment received in 2011 and $10,605 ($17,675 X 60% (. Hr block free efile 60)) in 2012. Hr block free efile In January 2013, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2013, 2014, and 2015 are reduced to $1,483 a month amortized over the remaining three years. Hr block free efile The new gross profit percentage, 47. Hr block free efile 32%, is figured in Example — Worksheet 10-2. Hr block free efile Example — Worksheet 10-2. Hr block free efile New Gross Profit Percentage — Selling Price Reduced 1. Hr block free efile Enter the reduced selling  price for the property 85,000 2. Hr block free efile Enter your adjusted  basis for the  property 40,000   3. Hr block free efile Enter your selling  expenses -0-   4. Hr block free efile Enter any depreciation  recapture -0-   5. Hr block free efile Add lines 2, 3, and 4. Hr block free efile 40,000 6. Hr block free efile Subtract line 5 from line 1. Hr block free efile  This is your adjusted  gross profit 45,000 7. Hr block free efile Enter any installment sale  income reported in  prior year(s) 22,605 8. Hr block free efile Subtract line 7 from line 6 22,395 9. Hr block free efile Future installments   47,325 10. Hr block free efile Divide line 8 by line 9. Hr block free efile  This is your new  gross profit percentage*. Hr block free efile 47. Hr block free efile 32% * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. Hr block free efile You will report installment sale income of $6,878 (47. Hr block free efile 32% of $14,535) in 2013, $7,449 (47. Hr block free efile 32% of $15,742) in 2014, and $8,067 (47. Hr block free efile 32% of $17,048) in 2015. Hr block free efile Form 6252. Hr block free efile   Use Form 6252 to report an installment sale in the year it takes place and to report payments received, or considered received because of related party resales, in later years. Hr block free efile Attach it to your tax return for each year. Hr block free efile Disposition of Installment Obligation If you are using the installment method and you dispose of the installment obligation, generally you will have a gain or loss to report. Hr block free efile It is considered gain or loss on the sale of the property for which you received the installment obligation. Hr block free efile Cancellation. Hr block free efile   If an installment obligation is canceled or otherwise becomes unenforceable, it is treated as a disposition other than a sale or exchange. Hr block free efile Your gain or loss is the difference between your basis in the obligation and its fair market value (FMV) at the time you cancel it. Hr block free efile If the parties are related, the FMV of the obligation is considered to be no less than its full face value. Hr block free efile Transfer due to death. Hr block free efile   The transfer of an installment obligation (other than to a buyer) as a result of the death of the seller is not a disposition. Hr block free efile Any unreported gain from the installment obligation is not treated as gross income to the decedent. Hr block free efile No income is reported on the decedent's return due to the transfer. Hr block free efile Whoever receives the installment obligation as a result of the seller's death is taxed on the installment payments the same as the seller would have been had the seller lived to receive the payments. Hr block free efile   However, if the installment obligation is canceled, becomes unenforceable, or is transferred to the buyer because of the death of the holder of the obligation, it is a disposition. Hr block free efile The estate must figure its gain or loss on the disposition. Hr block free efile If the holder and the buyer were related, the FMV of the installment obligation is considered to be no less than its full face value. Hr block free efile More information. Hr block free efile   For more information on the disposition of an installment obligation, see Publication 537. Hr block free efile Sale of depreciable property. Hr block free efile   You generally cannot report gain from the sale of depreciable property to a related person on the installment method. Hr block free efile See Sale to a Related Person in Publication 537. Hr block free efile   You cannot use the installment method to report any depreciation recapture income up to the gain on the sale. Hr block free efile However, report any gain greater than the recapture income on the installment method. Hr block free efile   The recapture income reported in the year of sale is included in your installment sale basis to determine your gross profit on the installment sale. Hr block free efile   Figure your depreciation recapture income (including the section 179 deduction and the section 179A deduction recapture) in Part III of Form 4797. Hr block free efile Report the depreciation recapture income in Part II of Form 4797 as ordinary income in the year of sale. Hr block free efile    If you sell depreciable business property, prepare Form 4797 first in order to figure the amount to enter on line 12 of Part I, Form 6252. Hr block free efile See the Form 6252 instructions for details. Hr block free efile   For more information on the section 179 deduction, see Section 179 Expense Deduction in chapter 7. Hr block free efile For more information on depreciation recapture, see Depreciation Recapture in  chapter 9. Hr block free efile Payments Received or Considered Received You must figure your gain each year on the payments you receive, or are treated as receiving, from an installment sale. Hr block free efile In certain situations, you are considered to have received a payment, even though the buyer does not pay you directly. Hr block free efile These situations occur when the buyer assumes or pays any of your debts, such as a loan, or pays any of your expenses, such as a sales commission. Hr block free efile However, as discussed later, the buyer's assumption of your debt is treated as a recovery of basis, rather than as a payment, in many cases. Hr block free efile Buyer pays seller's expenses. Hr block free efile   If the buyer pays any of your expenses related to the sale of your property, it is considered a payment to you in the year of sale. Hr block free efile Include these expenses in the selling and contract prices when figuring the gross profit percentage. Hr block free efile Buyer assumes mortgage. Hr block free efile   If the buyer assumes or pays off your mortgage, or otherwise takes the property subject to the mortgage, the following rules apply. Hr block free efile Mortgage less than basis. Hr block free efile   If the buyer assumes a mortgage that is not more than your installment sale basis in the property, it is not considered a payment to you. Hr block free efile It is considered a recovery of your basis. Hr block free efile The contract price is the selling price minus the mortgage. Hr block free efile Example. Hr block free efile You sell property with an adjusted basis of $19,000. Hr block free efile You have selling expenses of $1,000. Hr block free efile The buyer assumes your existing mortgage of $15,000 and agrees to pay you $10,000 (a cash down payment of $2,000 and $2,000 (plus 8% interest) in each of the next 4 years). Hr block free efile The selling price is $25,000 ($15,000 + $10,000). Hr block free efile Your gross profit is $5,000 ($25,000 − $20,000 installment sale basis). Hr block free efile The contract price is $10,000 ($25,000 − $15,000 mortgage). Hr block free efile Your gross profit percentage is 50% ($5,000 ÷ $10,000). Hr block free efile You report half of each $2,000 payment received as gain from the sale. Hr block free efile You also report all interest you receive as ordinary income. Hr block free efile Mortgage more than basis. Hr block free efile   If the buyer assumes a mortgage that is more than your installment sale basis in the property, you recover your entire basis. Hr block free efile The part of the mortgage greater than your basis is treated as a payment received in the year of sale. Hr block free efile   To figure the contract price, subtract the mortgage from the selling price. Hr block free efile This is the total amount (other than interest) you will receive directly from the buyer. Hr block free efile Add to this amount the payment you are considered to have received (the difference between the mortgage and your installment sale basis). Hr block free efile The contract price is then the same as your gross profit from the sale. Hr block free efile    If the mortgage the buyer assumes is equal to or more than your installment sale basis, the gross profit percentage always will be 100%. Hr block free efile Example. Hr block free efile The selling price for your property is $9,000. Hr block free efile The buyer will pay you $1,000 annually (plus 8% interest) over the next 3 years and assume an existing mortgage of $6,000. Hr block free efile Your adjusted basis in the property is $4,400. Hr block free efile You have selling expenses of $600, for a total installment sale basis of $5,000. Hr block free efile The part of the mortgage that is more than your installment sale basis is $1,000 ($6,000 − $5,000). Hr block free efile This amount is included in the contract price and treated as a payment received in the year of sale. Hr block free efile The contract price is $4,000: Selling price $9,000 Minus: Mortgage (6,000) Amount actually received $3,000 Add difference:   Mortgage $6,000   Minus: Installment sale basis 5,000 1,000 Contract price $4,000   Your gross profit on the sale is also $4,000: Selling price $9,000 Minus: Installment sale basis (5,000) Gross profit $4,000   Your gross profit percentage is 100%. Hr block free efile Report 100% of each payment (less interest) as gain from the sale. Hr block free efile Treat the $1,000 difference between the mortgage and your installment sale basis as a payment and report 100% of it as gain in the year of sale. Hr block free efile Buyer assumes other debts. Hr block free efile   If the buyer assumes any other debts, such as a loan or back taxes, it may be considered a payment to you in the year of sale. Hr block free efile   If the buyer assumes the debt instead of paying it off, only part of it may have to be treated as a payment. Hr block free efile Compare the debt to your installment sale basis in the property being sold. Hr block free efile If the debt is less than your installment sale basis, none of it is treated as a payment. Hr block free efile If it is more, only the difference is treated as a payment. Hr block free efile If the buyer assumes more than one debt, any part of the total that is more than your installment sale basis is considered a payment. Hr block free efile These rules are the same as the rules discussed earlier under Buyer assumes mortgage . Hr block free efile However, they apply only to the following types of debt the buyer assumes. Hr block free efile Those acquired from ownership of the property you are selling, such as a mortgage, lien, overdue interest, or back taxes. Hr block free efile Those acquired in the ordinary course of your business, such as a balance due for inventory you purchased. Hr block free efile   If the buyer assumes any other type of debt, such as a personal loan or your legal fees relating to the sale, it is treated as if the buyer had paid off the debt at the time of the sale. Hr block free efile The value of the assumed debt is then considered a payment to you in the year of sale. Hr block free efile Property used as a payment. Hr block free efile   If you receive property rather than money from the buyer, it is still considered a payment in the year received. Hr block free efile However, see Trading property for like-kind property , later. Hr block free efile Generally, the amount of the payment is the property's FMV on the date you receive it. Hr block free efile Exception. Hr block free efile   If the property the buyer gives you is payable on demand or readily tradable (see examples later), the amount you should consider as payment in the year received is: The FMV of the property on the date you receive it if you use the cash method of accounting, The face amount of the obligation on the date you receive it if you use an accrual method of accounting, or The stated redemption price at maturity less any original issue discount (OID) or, if there is no OID, the stated redemption price at maturity appropriately discounted to reflect total unstated interest. Hr block free efile See Unstated interest , later. Hr block free efile Examples. Hr block free efile If you receive a note from the buyer as payment, and the note stipulates that you can demand payment from the buyer at any time, the note is payable on demand. Hr block free efile If you receive marketable securities from the buyer as payment, and you can sell the securities on an established securities market (such as the New York Stock Exchange) at any time, the securities are readily tradable. Hr block free efile In these examples, use the above rules to determine the amount you should consider as payment in the year received. Hr block free efile Debt not payable on demand. Hr block free efile   Any evidence of debt you receive from the buyer that is not payable on demand is not considered a payment. Hr block free efile This is true even if the debt is guaranteed by a third party, including a government agency. Hr block free efile Fair market value (FMV). Hr block free efile   This is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of all the necessary facts. Hr block free efile Third-party note. Hr block free efile   If the property the buyer gives you is a third-party note (or other obligation of a third party), you are considered to have received a payment equal to the note's FMV. Hr block free efile Because the FMV of the note is itself a payment on your installment sale, any payments you later receive from the third party are not considered payments on the sale. Hr block free efile The excess of the note's face value over its FMV is interest. Hr block free efile Exclude this interest in determining the selling price of the property. Hr block free efile However, see Exception under Property used as a payment , earlier. Hr block free efile Example. Hr block free efile You sold real estate in an installment sale. Hr block free efile As part of the down payment, the buyer assigned to you a $50,000, 8% third-party note. Hr block free efile The FMV of the third-party note at the time of the sale was $30,000. Hr block free efile This amount, not $50,000, is a payment to you in the year of sale. Hr block free efile The third-party note had an FMV equal to 60% of its face value ($30,000 ÷ $50,000), so 60% of each principal payment you receive on this note is a nontaxable return of capital. Hr block free efile The remaining 40% is interest taxed as ordinary income. Hr block free efile Bond. Hr block free efile   A bond or other evidence of debt you receive from the buyer that is payable on demand or readily tradable in an established securities market is treated as a payment in the year you receive it. Hr block free efile For more information on the amount you should treat as a payment, see Exception under Property used as a payment , earlier. Hr block free efile   If you receive a government or corporate bond for a sale before October 22, 2004, and the bond has interest coupons attached or can be readily traded in an established securities market, you are considered to have received payment equal to the bond's FMV. Hr block free efile However, see Exception under Property used as a payment , earlier. Hr block free efile Buyer's note. Hr block free efile   The buyer's note (unless payable on demand) is not considered payment on the sale. Hr block free efile However, its full face value is included when figuring the selling price and the contract price. Hr block free efile Payments you receive on the note are used to figure your gain in the year received. Hr block free efile Sale to a related person. Hr block free efile   If you sell depreciable property to a related person and the sale is an installment sale, you may not be able to report the sale using the installment method. Hr block free efile For information on these rules, see the Instructions for Form 6252 and Sale to a Related Person in Publication 537. Hr block free efile Trading property for like-kind property. Hr block free efile   If you trade business or investment property solely for the same kind of property to be held as business or investment property, you can postpone reporting the gain. Hr block free efile See Like-Kind Exchanges in chapter 8 for a discussion of like-kind property. Hr block free efile   If, in addition to like-kind property, you receive an installment obligation in the exchange, the following rules apply to determine installment sale income each year. Hr block free efile The contract price is reduced by the FMV of the like-kind property received in the trade. Hr block free efile The gross profit is reduced by any gain on the trade that can be postponed. Hr block free efile Like-kind property received in the trade is not considered payment on the installment obligation. Hr block free efile Unstated interest. Hr block free efile   An installment sale contract may provide that each deferred payment on the sale will include interest or that there will be an interest payment in addition to the principal payment. Hr block free efile Interest provided in the contract is called stated interest. Hr block free efile   If an installment sale contract does not provide for adequate stated interest, part of the stated principal amount of the contract may be recharacterized as interest. Hr block free efile If Internal Revenue Code section 483 applies to the contract, this interest is called unstated interest. Hr block free efile   If Internal Revenue Code section 1274 applies to the contract, this interest is called original issue discount (OID). Hr block free efile   Generally, if a buyer gives a debt in consideration for personal use property, the unstated interest rules do not apply. Hr block free efile Therefore, the buyer cannot deduct the unstated interest. Hr block free efile The seller must report the unstated interest as income. Hr block free efile Personal-use property is any property in which substantially all of its use by the buyer is not in connection with a trade or business or an investment activity. Hr block free efile   If the debt is subject to the Internal Revenue Code section 483 rules and is also subject to the below-market loan rules, such as a gift loan, compensation-related loan or corporation-shareholder loan, then both parties are subject to the below-market loan rules rather than the unstated interest rules. Hr block free efile   Unstated interest reduces the stated selling price of the property and the buyer's basis in the property. Hr block free efile It increases the seller's interest income and the buyer's interest expense. Hr block free efile   In general, an installment sale contract provides for adequate stated interest if the stated interest rate (based on an appropriate compounding period) is at least equal to the applicable federal rate (AFR). Hr block free efile    The AFRs are published monthly in the Internal Revenue Bulletin (IRB). Hr block free efile You can get this information by contacting an IRS office. Hr block free efile IRBs are also available at IRS. Hr block free efile gov. Hr block free efile More information. Hr block free efile   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Hr block free efile Example. Hr block free efile You sell property at a contract price of $6,000 and your gross profit is $1,500. Hr block free efile Your gross profit percentage is 25% ($1,500 ÷ $6,000). Hr block free efile After subtracting interest, you report 25% of each payment, including the down payment, as installment sale income from the sale for the tax year you receive the payment. Hr block free efile The remainder (balance) of each payment is the tax-free return of your adjusted basis. Hr block free efile Example On January 3, 2013, you sold your farm, including the home, farm land and buildings. Hr block free efile You received $50,000 down and the buyer's note for $200,000. Hr block free efile In addition, the buyer assumed an outstanding $50,000 mortgage on the farm land. Hr block free efile The total selling price was $300,000. Hr block free efile The note payments of $25,000 each, plus adequate interest, are due every July 1 and January 1, beginning in July 2013. Hr block free efile Your selling expenses were $15,000. Hr block free efile Adjusted basis and depreciation. Hr block free efile   The adjusted basis and depreciation claimed on each asset sold are as follows:   Depreciation Adjusted Asset Claimed Basis Home* -0- $33,743 Farm land -0- 73,610 Buildings $31,500 35,130 * Owned and used as main home for at least 2 of the 5 years prior to the sale Gain on each asset. Hr block free efile   The following schedule shows the assets included in the sale, each asset's selling price based on its respective value, the selling expense allocated to each asset, the adjusted basis of each asset, and the gain on each asset. Hr block free efile The selling expense for each asset is 5% of the selling price ($15,000 selling expense ÷ $300,000 selling price). Hr block free efile   Selling Selling Adjusted     Price Expense Basis Gain Home* $60,000 $3,000 $33,743 $23,257 Farm land  165,000  8,250  73,610  83,140 Buildings 75,000 3,750 35,130 36,120   $300,000 $15,000 $142,483 $142,517 * Owned and used as main home for at least 2 of the 5 years prior to the sale Depreciation recapture. Hr block free efile   The buildings are section 1250 property. Hr block free efile There is no depreciation recapture income for them because they were depreciated using the straight line method. Hr block free efile See chapter 9 for more information on depreciation recapture. Hr block free efile   Special rules may apply when you sell section 1250 assets depreciated under the straight line method. Hr block free efile See the Unrecaptured Section 1250 Gain Worksheet in the Instructions for Schedule D (Form 1040). Hr block free efile See chapter 3 of Publication 544, Sales and Other Dispositions of Assets, for more information on section 1250 assets. Hr block free efile Installment sale basis and gross profit. Hr block free efile   The following table shows each asset reported on the installment method, its selling price, installment sale basis, and gross profit. Hr block free efile     Installment     Selling Sale Gross   Price Basis Profit Farm land $165,000 $73,610 $83,140 Buildings 75,000 35,130 36,120   $240,000 $108,740 $119,260 Section 1231 gains. Hr block free efile   The gain on the farm land and buildings is reported as section 1231 gains. Hr block free efile See Section 1231 Gains and Losses in chapter 9. Hr block free efile Contract price and gross profit percentage. Hr block free efile   The contract price is $250,000 for the part of the sale reported on the installment method. Hr block free efile This is the selling price ($300,000) minus the mortgage assumed ($50,000). Hr block free efile   Gross profit percentage for the sale is 47. Hr block free efile 70% ($119,260 gross profit ÷ $250,000 contract price). Hr block free efile The gross profit percentage for each asset is figured as follows:   Percent Farm land ($83,140 ÷ $250,000) 33. Hr block free efile 256 Buildings ($36,120 ÷ $250,000) 14. Hr block free efile 448 Total 47. Hr block free efile 70 Figuring the gain to report on the installment method. Hr block free efile   One hundred percent (100%) of each payment is reported on the installment method. Hr block free efile The total amount received on the sale in 2013 is $75,000 ($50,000 down payment + $25,000 payment on July 1). Hr block free efile The installment sale part of the total payments received in 2013 is also $75,000. Hr block free efile Figure the gain to report for each asset by multiplying its gross profit percentage times $75,000. Hr block free efile   Income Farm land—33. Hr block free efile 256% × $75,000 $24,942 Buildings—14. Hr block free efile 448% × $75,000 10,836 Total installment income for 2013 $35,778 Reporting the sale. Hr block free efile   Report the installment sale on Form 6252. Hr block free efile Then report the amounts from Form 6252 on Form 4797 and Schedule D (Form 1040). Hr block free efile Attach a separate page to Form 6252 that shows the computations in the example. Hr block free efile If you sell depreciable business property, prepare Form 4797 first in order to figure the amount to enter on line 12 of Part I, Form 6252. Hr block free efile Section 1231 gains. Hr block free efile   The gains on the farm land and buildings are section 1231 gains. Hr block free efile They may be reported as either capital or ordinary gain depending on the net balance when combined with other section 1231 losses. Hr block free efile A net 1231 gain is capital gain and a net 1231 loss is an ordinary loss. Hr block free efile Installment income for years after 2013. Hr block free efile   You figure installment income for the years after 2013 by applying the same gross profit percentages to the payments you receive each year. Hr block free efile If you receive $50,000 during the year, the entire $50,000 is considered received on the installment sale (100% × $50,000). Hr block free efile You realize income as follows:   Income Farm land—33. Hr block free efile 256% × $50,000 $16,628 Buildings—14. Hr block free efile 448% × $50,000 7,224 Total installment income $23,852   In this example, no gain ever is recognized from the sale of your home. Hr block free efile You will combine your section 1231 gains from this sale with section 1231 gains and losses from other sales in each of the later years to determine whether to report them as ordinary or capital gains. Hr block free efile The interest received with each payment will be included in full as ordinary income. Hr block free efile Summary. Hr block free efile   The installment income (rounded to the nearest dollar) from the sale of the farm is reported as follows: Selling price $190,000 Minus: Installment basis (108,740) Gross profit $81,260     Gain reported in 2012 (year of sale) $35,778 Gain reported in 2013:   $50,000 × 47. Hr block free efile 70% 23,850 Gain reported in 2014:   $50,000 × 47. Hr block free efile 70% 23,850 Gain reported in 2015:   $50,000 × 47. Hr block free efile 70% 23,850 Gain reported in 2016:   $25,000 × 47. Hr block free efile 70% 11,925 Total gain reported $119,253 Prev  Up  Next   Home   More Online Publications