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Screen InstPY - Prior Year Installment Sale (1040)
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Overview
Use this screen to enter asset sale information for Form 6252 for prior-year installment sales. Enter current-year installment sales in the Sale screen. Current-year installment sales entered in this screen, won't be reported correctly on Form 6252. Current-year installment sales should be entered in the Sale screen.
Don't enter information for a prior-year installment sale of section 179 property that was separately reported on a Schedule K-1. Enter those prior-year installment sales in the K1Sale screen.
UltraTax CS uses the dates of acquisition and sale entered in the InstPY screen to determine short-term versus long-term transactions, the appropriate parts of Form 4797, Form 6252, or Schedule D on which to report sales, and whether the transaction is a prior-year installment sale.
Overrides
To force printing of Form 4797, Form 6252, and/or Schedule D, enter the asset information in the InstPY screen.
If you enter asset information directly on Form 4797 or Form 6252 and not in the InstPY screen, the form doesn't print.
Asset information that you enter directly in the form doesn't transfer back to the InstPY screen. Don't enter asset information directly in the form. Enter sale information in this screen.
Form 6252 - Prior Year Installment Sale General Information
The information in this section applies to all of the forms used to report sales of assets.
Unit / Form
These fields contain information about the business unit activity. UltraTax CS uses this information to gather and coordinate information for the business unit activity. For example, these fields enable linking of information (such as income, loss, sales, credits, and asset detail) for the activity. The following table lists the available forms and the folders in which they are located.
Folder | Form description |
|---|---|
Business | Schedule C |
Rent & Royalty | Schedule E, Page 1 |
Farm | Schedule F |
Farm Rental | Form 4835 |
K1 1065, 1120S | Schedule K1 S-corp / Partnership |
K1 1041 | Schedule K1 Trust / Estate |
1040 Adjustments | 2106, 8829 |
Personal Sale | Miscellaneous |
Because there are multiple forms available in the 1040 Adjustments folder, you'll need to enter the form information. The available forms that you can enter in the
Form
field are listed in the table that follows and in the fieldview.Form code | Form description |
|---|---|
2106 | Form 2106 |
Misc | Miscellaneous |
M | Miscellaneous |
note
- You can leave theFormandUnitfields blank in screens located in the Personal Sale folder. The only form code available to these screens is M.
- The 4562, 8829, and Auto screens are only available when detailed asset data entry is turned off. (To turn off detailed asset data entry, selectFile,Client Properties,Advanced Properties, and clear theEnter asset detail informationcheckbox in theEnter Asset Detailtab.) Although the Sale and 8824 screens in the Personal Sale folder are visible when detailed asset data entry is turned on, sales entered in the Sale screen and like-kind exchanges entered in the 8824 screen can't be linked to a business unit activity. Enter sales and like-kind exchanges related to a business unit activity in that particular entity's folder.
Description
UltraTax CS uses the description in this field as the unit description. This field is mandatory.
State
If you're processing a state return, enter the 2-character postal code for the state to which this unit belongs. This code is used by the various state applications to help determine in-state and out-of-state amounts.
note
A postal code entry is required for proper state processing.
Treatment
The Treatment code describes the nature of the asset and determines where to transfer the information on Form 4797 or Schedule D. If the prior-year installment sale was not proforma'd from last year's application, select a code from the fieldview to indicate where the installment sale was reported in the year of the original sale.
note
Installment sales subject to section 1202 exclusion (i.e. coded V, X, Y, or Z) will calculate and report 100% of the installment income on Form 6252 and Schedule D line 11 and the exclusion amount on Form 8949 page 2, column (f) with code Q.
Section 1250 property
Mark this field to indicate that the asset sold was section 1250 property. UltraTax CS calculates unrecaptured section 1250 gain, if applicable, and uses the amount in the tax calculation using maximum capital gains rates.
Unrecaptured section 1250 gains from Forms 4797 and 6252 transfer to the Unrecaptured Section 1250 Gain Worksheet. This worksheet calculates the total unrecaptured section 1250 gains to be reported on Page 2 of Schedule D.
Qualified Real Property Section 1245/1250 Percentage
UltraTax CS proformas the qualified real property Section 1245/1250 percentage to this field when the prior year qualified real property asset was entered in the Asset module and sold on the installment basis.
note
- In the year of sale, the Asset module transfers the information related to a qualified real property asset sold at a gain to 2 separate Sale screens.
- UltraTax CS applies the Section 1245/1250 percentage to all the amounts transferred from the Asset module .
- If you enter the full amount of the payment received in theTotal current year payments receivedfield, enterXin theApply Qualified Real Property Percentage to current year payments receivedfield.
- If you enter the payment received after applying the Section 1245/1250 percentage in theTotal current year payments receivedfield, clear theXin theApply Qualified Real Property Percentage to current year payments receivedfield.
- See also Disposition of qualified real property FAQs and Notice 2013-59, 2013-40 IRB 297 -- IRC Sec(s). 179 for additional information on the disposition of qualified real property.
Apply Qualified Real Property Section Percentage to current year payments received
X
proformas to this field when a percentage is proforma’d to the Qualified Real Property Section 1245/1250 Percentage
field.note
- If you enter the full amount of the payment received in theTotal current year payments receivedfield, enterXin this field.
- If you enter the payment received after applying the Section 1245/1250 percentage in theTotal current year payments receivedfield, clear theXin this field.
- In the year of sale, the Asset module transfers the information related to a qualified real property asset sold at a gain to 2 separate Sale screens.
- UltraTax CS applies the Section 1245/1250 percentage to all the amounts transferred from the Asset module . UltraTax CS proformas these amounts to the InstPY screen when the asset is sold on the installment basis.
- See also Disposition of qualified real property FAQs and Notice 2013-59, 2013-40 IRB 297 -- IRC Sec(s). 179 for additional information on the disposition of qualified real property.
Property type code
Select the code that best describes the property listed in the
Description
field. If you don't enter a code, Form 6252, line 1, will default to code 4 – Other property types.Installment sale type: Like-kind exchange
An
X
proformas to this field when the installment sale was from a prior year like-kind exchange. The field isn't used in the calculation of the return and not available for data entry.Installment sale type: Principal residence
Mark this field only if all the depreciation was for periods after May 6, 1997, and the reported gain isn't reported on Form 4797.
Installment sale type: Automobile
For employee business expense activities using supplemental business expense (SBE) allocation, enter
X
in this field if the sale is related to an auto asset. UltraTax CS uses this information to include the sale of the auto asset for passive and at-risk calculations when supplemental business expense allocation is present in the 2106 screen. For all other activities, this field is optional.Installment sale type: Schedule J farming/fishing assets
Mark this field to include this prior year installment sale in the calculation of Taxable Income from Farming and Fishing on the Schedule J Farm Income Averaging Worksheet 1.
note
This field is only available on the InstPY screen located in the Personal Sale folder. The InstPY screen is available in the Personal Sale folder to enter in Installment Sales from past activities that have been disposed. If the farming activity is an ongoing activity, the prior year installment sale should be entered in the Farm folder for that activity. When a Farm, Farm Rental, or K1 farming activity is disposed, UltraTax CS proformas the installment sale to the InstPY screen in the Personal Sale folder and marks this field. Review the sale information to verify that the income is eligible for farm income averaging.
Installment sale type: Passive
Enter a code in this field if this asset sale was from a passive activity disposed of in a prior year. The following table shows the passive activity code and passive treated location used on the return.
Passive activity code | Return location for Passive Activity |
|---|---|
1 = Other Passive | Form 8582, Worksheet 3 |
2 = Rental Real Estate w/ active participation | Form 8582, Worksheet 1 |
3 = No limitation | No passive treatment on return |
4 = Real Estate Professional | No passive treatment on return, Income included on Schedule E, line 43 |
note
This field is only available on the InstPY screen located in the Personal Sale folder. The InstPY screen is available in the Personal Sale folder to enter in Installment Sales from previous activities. If the passive activity is an ongoing activity, the prior year installment sale should be entered in that activities folder. When a passive activity is disposed, UltraTax CS proformas the installment sale to the InstPY screen in the Personal Sale folder and enters a code in this field. Review the sale information to verify that the income is to be included in the passive activity calculations.
State use
If applicable, enter a state use code or select a code from the fieldview. The codes that are available in this field are specific to the state postal code entered in the
State
field. If state use codes aren't applicable to the entered state, this field will be disabled (shaded) and won't have any codes to select.note
- Amount fields applicable to 1 state may not be applicable to another state. Those amount fields that don't apply to a particular state have been disabled (shaded). Amount fields that aren't shaded are considered enabled for the applicable state.
- For Massachusetts returns, the State of Massachusetts doesn't acknowledge installment sales without prior approval from the Massachusetts Department of Revenue. Enter1to indicate that the current-year installment sale doesn't apply. If Massachusetts has acknowledged this sale as an installment sale, leave this field blank.
- For New Hampshire returns:
- EnterJor leave theT, S, Jfield blank if 100% of Form BT-Summary activities are to be allocated 100%. Only those activities specifically codedSare assigned to the spouse. Also, for each applicable form or schedule, enter the 2-digit state postal code for the location of each business activity. UltraTax CS uses this information to process apportionment Forms BET-80 and DP-80.
- Enter1in theState usefield to indicate that this sale is ineligible for installment sale treatment. New Hampshire ignore any information entered in this screen, as it assumes that the sale was fully reported in a prior year.
- Enter2in theState usefield to indicate that this sale qualifies for the Proprietorship Business Profits tax.
- For Pennsylvania, Massachusetts, New Hampshire, and Wisconsin returns, enter1in theState usefield to indicate this sale is ineligible for installment sale treatment. Pennsylvania and New Hampshire ignore any information entered in this screen, as it assumes that the sale was fully reported in a prior year.
- For Iowa returns, enter3in theState usefield to indicate the unit is eligible for Qualifying Capital Gains Exclusion. This amount will transfer automatically to the IASale screen.
- For California returns, code4isn't applicable for this screen.
- For Vermont returns, enter6in this field if the unit qualifies for the 40% capital gains exclusion.
Gross Profit and Contract Price
Use this section to enter gross profit and contract price information. UltraTax CS uses the information in this section to allocate any alternative minimum tax gain / loss adjustment and to complete Part III, Related Party Installment Sale Income.
Date acquired / Date sold
Enter the date, each asset was acquired and sold, in MM/DD/YY format. If you want
Various
to print for the date on the return, enter V
. To print Inherit
, enter I.
Gross sales price or insurance proceeds received
Enter the total of any money, the face amount of installment obligation, and the fair market value of other property received. Also include any existing mortgage or other debt the buyer assumed or took the property subject to. The amount entered must include the amount of any indebtedness assumed to report the installment sale.
Mortgage and other debts the buyer assumed
Enter mortgages or other debts the buyer assumed or took the property subject to during the year of sale. The
Mortgage and other debts the buyer assumed
field must include the amount of any indebtedness assumed.Depreciation allowed or allowable
Enter the depreciation allowed in this field, including the amount of any section 179 deduction.
Commissions and other expenses of sale
Include 1st year fixing-up expenses for Form 6252 in this field.
Income recapture from Form 4797
Enter the amount of income recapture reported on the line 12 of the Form 6252 filed in the year of sale.
Section 121 exclusion form sale of main home
Enter the amount of section 121 exclusion reported on line 15 of the Form 6252 filed in the year of sale.
Alternative minimum tax gain / loss adjustment
Enter the difference between the gain or loss reported for the regular tax and the gain or loss calculated for the AMT. UltraTax CS uses this amount to calculate the adjusted gain or loss reported on Form 6251. The current-year gain / loss adjustment is calculated as the percentage of current-year gain divided by total gain to be reported over the life of the installment sale.
Installment Sale Income
Use this section to enter information for Form 6252, Part II. If the prior-year sale is determined to be a section 1231 sale, UltraTax CS uses the dates of acquisition and sale to determine if the Form 6252 gain goes to Form 4797, Part I or Part II. Long-term sales go to Part I and short-term sales go to Part II. If other Form 4797 information is present, the gain goes to the appropriate line. If not, the gain goes directly to Schedule D (either short-term or long-term).
Prior year gross profit percentage, AMT if different (Force)
Enter the alternative minimum tax (AMT) percentage if it is different from the federal prior-year gross profit percentage. The percentage will be used in the calculation of the AMT version of Form 6252.
Total current year payments received
Enter all money and FMV of any property received in the current tax year for the applicable periods. Don't include interest payments received. UltraTax CS reports this amount on Form 6252 as "Payments received during the year." UltraTax CS prints Form 6252 if an amount is entered in this field or if this is a related-party transaction and Part III is required. To print Form 6252 when there are no payments in the current year, enter
0
(zero) in this field.Prior year payments received
UltraTax CS uses information entered in the attached statement to automatically produce an installment sale history at print time. Complete sale information is required to produce an accurate report. Prior-year sales may not have complete sale information in the input screen. If you want to have a complete history of the installment sale, enter the information in the statement.
The printed statement reports current-year information first; therefore, enter any information in descending order. The fields within the statement are described as follows:
- Year:Enter the year the payment was received. Current-year information is reported on the first line of the printed statement. Enter payments in descending order.
- Contract Balance End of Year:Enter the end-of-year contract balance for the applicable year. The printed statement reports the contract balance as net of the current-year principal payment.
- Principal Payments:Enter the principal payment received. This amount should equal the Form 6252, Payments received during the year line for the applicable year. UltraTax CS also reports this column's total in the input screen and on Form 6252.
- Reported Income:Enter the installment sale income that was reported on Form 6252 for the appropriate year.
- Total Income:Enter the amount of gross profit for the installment sale as reported on the sale's initial Form 6252, Gross profit line. This amount remains constant for all years entered in the statement.
- Unreported Income:Enter the amount of gross profit that hasn't yet been reported as income.
Balance of (AMT) unrecaptured section 1250 gain to be taxed
Enter the amount of unrecaptured section 1250 gain to be taxed at the 25% rate. Regulation 1.453-12 (effective August 20, 1999) provides guidelines on how to report 25% gain on installment sales of depreciable real estate. The final regulation adopted a front-loaded allocation method (for example, 25% rate gain is taken into account as payments are received before any 20% rate gain is included). Refer to Regulation 1.453-12 for further information.
Total ordinary income to recapture / Ordinary income previously recaptured
Enter the amount of ordinary income to recapture for only section 1252, 1254, or 1255 property. Don't enter ordinary income from a section 179 expense deduction. Don't enter ordinary income from a section 1245 or 1250 property.
Beginning of year, remaining gross profit
Enter the remaining gross profit amount at the beginning of the year. UltraTax CS uses the amount for passive calculations, if applicable, and to produce the installment sale history statement.
Related Party Installment Sale Information
Date of second sale
UltraTax CS uses the date of the second sale to complete Form 6252, Part III, Related Party Installment Income. If the second disposition occurred less than 2 years before the 1st disposition, additional income may be recognized on Form 6252.
Explanation if no tax avoidance purpose
If the non-tax avoidance exception applies to the disposition, enter your explanation, as required by Form 6252, in the attached statement. If there's data in the statement, UltraTax CS marks the appropriate box on the form and prints the statement.
note
If you enter information in the attached statement and enter code
1
or 2
in the previous field, UltraTax CS marks 2 exception codes on the Form 6252.Selling price...
Enter an amount in this field when the related party resells the property in a year subsequent to the original installment sale.