Knowledge Base

12084: Entering an Installment Sale (Drake16 and Prior)

Fed Returns Generally

How do I enter an installment sale in Drake Tax 2016 and prior?

Note: ​This article applies to data entry for Drake16 and prior ONLY. For steps starting in Drake17, see Related Links below. 

To enter an installment sale:

  1. Enter the details for the asset that was sold.
      1. If the asset is already entered on screen 4562, complete the If sold section of the screen. Enter the Date sold, Sales price and any Expense of sale. For the Property type, choose "IN" for Section 1245 property or "IS" for Section 1250 property.
      2. If this asset hasn’t been entered on screen 4562, create a 4797 screen for the asset, indicating with a “Y” (just above the Part IV heading on the screen) that the sale is also reported on Form 6252. Be sure to select the appropriate property type from the drop list.
  2. View the return, checking to see if there is an amount on Form 4797, line 31. (You must enter an amount in the Sales price field to generate page 2 of Form 4797.) If line 31 contains an amount, proceed to step 3 below. If it does not, proceed to Step 4.
  3. Enter the amount from Form 4797, line 31, on screen 6252, line 12, "Depreciation to recapture."
  4. Complete a 6252 screen for the asset. Listed below are specific instructions and explanations for completing the separate parts of screen 6252.
    1. Part I (lines 1-15) — Complete Part I for the year of sale only. Part I will also need to be completed in subsequent years in order to have the gross profit percentage to carry through to subsequent years. NOTE: As an alternative, and only if the current year is not the year of the sale, you can enter the gross profit percentage in the appropriate field on screen 6252. Use a whole number, not the decimal equivalent. For example, you would enter 62% as 62, not as .62.
    2. Part II (line 19 and Receipt category section) Complete the Part II fields for the year of sale and for any year in which a payment or debts must be treated as a payment on installment options. To generate Part II of Form 6252, record payments received in current and prior years the Receipt category section, located on the right-hand side of screen 6252. (Line 19 can not be a negative number.)
    3. Part III (Related Party Sale Income) Complete the Part III section if the sale was made to a related party, and the income is not from the final payment in the current tax year.
    4. Amount of unrecaptured 1250 gain If unrecaptured section 1250 gain is present, enter the gain amount in the appropriate field on screen 6252. The taxable amount is calculated on the WK_1250 worksheet and is carried to Schedule D, line 19 based on these calculations.
  5. View the return. See line 31 of Form 4797 for the recapture amount (if any).
  6. ​Note: In rare cases, two 4797 forms may be created when the return is generated. If two 4797 forms are present, the return may not be eligible for e-filing.
      -If recapture is necessary, the two 4797 forms cannot be avoided. The return must be paper-filed.
      -If there is no recapture, you can delete the second 4797 form for the asset and recalculate the return. To do so, return to screen 4797 and press Ctrl+D. 

    Group sales entered on a 4562, Depreciation and Amortization, do not carry to a 6252, Installment Sales. If you determine that a 6252 is needed, enter it directly.

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