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taxmap/pubs/p537-000.htm#en_us_publink1000221585
Publication 537

Installment Sales

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Future Developments(p1)


For the latest information about developments related to Publication 537, such as legislation enacted after it was published, go to www.irs.gov/pub537.

Reminder(p1)


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Photographs of missing children.(p1)
The Internal Revenue Service (IRS) 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.

taxmap/pubs/p537-000.htm#en_us_publink1000272066Introduction

Note. Section references within this publication are to the Internal Revenue Code and regulation references are to the Income Tax Regulations under the Code.
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.
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, also see the appropriate discussion under Other Rules.
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Comments and suggestions.(p2)

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We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:

Internal Revenue Service
Tax Forms and Publications Division
1111 Constitution Ave. NW, IR-6526
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.
You can send your comments from www.irs.gov/formspubs/. Click on "More Information" and then on "Comment on Tax Forms and Publications."
Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.
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Ordering forms and publications.(p2)
Visit www.irs.gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received.

Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613


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Tax questions.(p2)
If you have a tax question, check the information available on IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

taxmap/pubs/p537-000.htm#TXMP18b7c8c7

Useful items

You may want to see:


Publication
 523 Selling Your Home
 541 Partnerships
 544 Sales and Other Dispositions of Assets
 550 Investment Income and Expenses
 551 Basis of Assets
 4895 Tax Treatment of Property Acquired From a Decedent Dying in 2010
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.
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What Is an
Installment Sale?(p2)

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An installment sale is a sale of property where you receive at least one payment after the tax year of the sale.
The rules for installment sales do not apply if you elect not to use the installment method (see Electing Out of the Installment Method under Other Rules, later) or the transaction is one for which the installment method may not apply.
The installment sales method cannot be used for the following.
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Sale of inventory.(p2)

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The regular sale of inventory of personal property does not qualify as an installment sale even if you receive a payment after the year of sale. See Sale of a Business under Other Rules, later.
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Dealer sales.(p2)

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Sales of personal property by a person who regularly sells or otherwise disposes of the same type of personal property on the installment plan are not installment sales. This rule also applies to real property held for sale to customers in the ordinary course of a trade or business. However, the rule does not apply to an installment sale of property used or produced in farming.
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Special rule.(p2)
Dealers of time-shares and residential lots can treat certain sales as installment sales and report them under the installment method if they elect to pay a special interest charge. For more information, see section 453(l).
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Stock or securities.(p2)

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You cannot use the installment method to report gain from the sale of stock or securities traded on an established securities market. You must report the entire gain on the sale in the year in which the trade date falls.
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Installment obligation.(p2)

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The buyer's obligation to make future payments to you can be in the form of a deed of trust, note, land contract, mortgage, or other evidence of the buyer's debt to you.