An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. If you dispose of property in an installment sale, you report part of your gain when you receive each installment payment. You cannot use the installment method to report a loss.

This publication discusses the general rules that apply to all installment sales. It also discusses more complex rules that apply only when certain conditions exist or certain types of property are sold. There are two examples of reporting installment sales on Form 6252 at the end of the publication.

If you sold your home or other nonbusiness property under an installment plan, you will need to read only the General Rules. If you sold business or rental property or had a like-kind exchange or other complex situation, see the appropriate discussion under Other Rules, later.

If you sold your entire interest in a passive activity, special rules apply to the treatment of passive activity losses. See Publication 925 for information on this topic.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

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Internal Revenue Service
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