An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. In an installment sale you report part of your gain when you receive each 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.

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

If you sell 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.

You can e-mail us while visiting our web site at www.irs.gov.

You can write to us at the following address:

Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

First | Next

Publication Index | 2001 Tax Help Archives | Tax Help Archives | Home