2003 Tax Help Archives  
Publication 537 2003 Tax Year

Publication 537
Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Important Reminders

Accrual basis taxpayers.  For sales occurring after December 16, 1999, accrual basis taxpayers were required to report installment sales under the accrual method of accounting. The Installment Tax Correction Act of December 28, 2000, repealed that requirement. If you entered into an installment sale after December 16, 1999, and filed an income tax return by April 16, 2001, reporting the sale on an accrual method, you have IRS approval to revoke your effective election out of the installment method. (See Electing Out of the Installment Method). To revoke the election, you must file an amended return for the year of the installment sale (and any other year affected by the sale), reporting the gain on the installment method. (See Figuring Installment Sale Income and Reporting Installment Sale Income). You generally have three years from the due date of the original return to file an amended return. You cannot revoke your effective election out of the installment method if the taxable year in which any payment on the installment obligation was received has closed.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child.

Introduction

An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. If you realize a gain on an installment sale, you may be able to report part of your gain when you receive each payment. This method of reporting gain is called the installment method. You cannot use the installment method to report a loss. You can choose to report all of your gain in the year of sale.

This publication discusses the general rules that apply to using the installment method. 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 sale income on Form 6252 at the end of the publication.

If you sell your home or other nonbusiness property under an installment plan, you may 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.

Comments and suggestions.

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

You can email us at *taxforms@irs.gov. Please put “Publications Comment” on the subject line.

You can write to us at the following address:


Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
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.

Useful Items - You may want to see:

Publication

  • 523 Selling Your Home
  • 538 Accounting Periods and Methods
  • 541 Partnerships
  • 544 Sales and Other Dispositions of Assets
  • 550 Investment Income and Expenses
  • 551 Basis of Assets
  • 925 Passive Activity and At-Risk Rules

Form (and Instructions)

  • 4797 Sales of Business Property
  • 6252 Installment Sale Income

See How To Get Tax Help near the end of this publication for information about getting publications and forms.

Publications Index | 2003 Tax Help Archives | Tax Help Archives | Home