INSTALLMENT SALES QUESTION

CPA Exam Review CPA Exam Forum Off-Topic & CPA Exam Misc OT: Off Topic INSTALLMENT SALES QUESTION

This topic contains 5 replies, has 3 voices, and was last updated by  Green CPA 1 month, 3 weeks ago.

Viewing 6 posts - 1 through 6 (of 6 total)
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  • #2429964

    Green CPA
    Participant

    I have a question on installment sales. would greatly appreciate if anyone can help.

    Have an installment sale and incurred additional expenses in the second year. how do I report this on the tax return? there doesn't seem to be a place for it on the form.

    AUD - 81
    BEC - 91
    FAR - 94
    REG - 94
    Green CPA
    #2431641
    YouCanDoIt
    YouCanDoIt
    Participant

    Hiya

    Maybe you an use this as a starting point
    https://www.irs.gov/taxtopics/tc705

    AUD - 77
    BEC - 79
    FAR - 75
    REG - 80
    Won't know until you try.
    #2431983

    chandler
    Participant

    Add those to the cost basis and calculate the new gross profit % to be used on part II of the Form 6252. This results in the adjusted gain that goes to Sch D. Let me know if you need help with that, and I can help you on the gross profit % calc.

    Chandler Priest

    Licensed TX CPA

    REG 01/27/18 - 98

    BEC 03/03/18 - 96

    AUD 04/07/18 - 91

    FAR 06/02/18 -96

    #2433846

    Green CPA
    Participant

    @chandler thank you so much for answering. I saw how to calculate the new percentage on the IRS publication 537 and I understand that. my issue is being that it is the second year of the installment sale the tax return software and forms don't give me an option to make adjustments to the previously added info. there is no place in the form to account for any modifications to the sale. once I arrive at the correct gross percentage I just need to override the percentage from the tax return? there is no correct way to do it? I appreciate your help!!

    AUD - 81
    BEC - 91
    FAR - 94
    REG - 94
    Green CPA
    #2433867

    chandler
    Participant

    Right, if you're doing the updated gross profit % correctly, it accounts for PY income already recognized. Assuming it wasn't a sale to a related party, only part II of the form should be populating. You'll likely have to override the gross profit % or possibly the remaining gross profit, but it shouldn't matter since none of the sales inputs actually make it on to the form in year 2.

    Chandler Priest

    Licensed TX CPA

    REG 01/27/18 - 98

    BEC 03/03/18 - 96

    AUD 04/07/18 - 91

    FAR 06/02/18 -96

    #2433876

    Green CPA
    Participant

    Makes sense. I am wondering did you have such an experience already?

    AUD - 81
    BEC - 91
    FAR - 94
    REG - 94
    Green CPA
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