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H And R Block

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H And R Block

H and r block Publication 537 - Main Content Table of Contents What Is an Installment Sale?Special rule. H and r block General RulesFiguring Installment Sale Income Reporting Installment Sale Income Other RulesElecting Out of the Installment Method Payments Received or Considered Received Escrow Account Depreciation Recapture Income Sale to a Related Person Like-Kind Exchange Contingent Payment Sale Single Sale of Several Assets Sale of a Business Unstated Interest and Original Issue Discount (OID) Disposition of an Installment Obligation Repossession Interest on Deferred Tax Reporting an Installment SaleRelated person. H and r block Several assets. H and r block Special situations. H and r block Schedule D (Form 1040). H and r block Form 4797. H and r block How To Get Tax Help What Is an Installment Sale? An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. H and r block 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. H and r block The installment sales method cannot be used for the following. H and r block Sale of inventory. H and r block   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. H and r block See Sale of a Business under Other Rules, later. H and r block Dealer sales. H and r block   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. H and r block This rule also applies to real property held for sale to customers in the ordinary course of a trade or business. H and r block However, the rule does not apply to an installment sale of property used or produced in farming. H and r block Special rule. H and r block   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. H and r block For more information, see section 453(l). H and r block Stock or securities. H and r block   You cannot use the installment method to report gain from the sale of stock or securities traded on an established securities market. H and r block You must report the entire gain on the sale in the year in which the trade date falls. H and r block Installment obligation. H and r block   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. H and r block General Rules If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you elect out of using the installment method. H and r block See Electing Out of the Installment Method under Other Rules, later, for information on recognizing the entire gain in the year of sale. H and r block Sale at a loss. H and r block   If your sale results in a loss, you cannot use the installment method. H and r block If the loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale. H and r block Unstated interest. H and r block   If your sale calls for payments in a later year and the sales contract provides for little or no interest, you may have to figure unstated interest, even if you have a loss. H and r block See Unstated Interest and Original Issue Discount (OID) under Other Rules, later. H and r block Figuring Installment Sale Income You can use the following discussions or Form 6252 to help you determine gross profit, contract price, gross profit percentage, and installment sale income. H and r block Each payment on an installment sale usually consists of the following three parts. H and r block Interest income. H and r block Return of your adjusted basis in the property. H and r block Gain on the sale. H and r block In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. H and r block You do not include in income the part that is the return of your basis in the property. H and r block Basis is the amount of your investment in the property for installment sale purposes. H and r block Interest Income You must report interest as ordinary income. H and r block Interest is generally not included in a down payment. H and r block However, you may have to treat part of each later payment as interest, even if it is not called interest in your agreement with the buyer. H and r block Interest provided in the agreement is called stated interest. H and r block If the agreement does not provide for enough stated interest, there may be unstated interest or original issue discount. H and r block See Unstated Interest and Original Issue Discount (OID) under Other Rules, later. H and r block Adjusted Basis and Installment Sale Income (Gain on Sale) After you have determined how much of each payment to treat as interest, you treat the rest of each payment as if it were made up of two parts. H and r block A tax-free return of your adjusted basis in the property, and Your gain (referred to as installment sale income on Form 6252). H and r block Figuring adjusted basis for installment sale purposes. H and r block   You can use Worksheet A to figure your adjusted basis in the property for installment sale purposes. H and r block When you have completed the worksheet, you will also have determined the gross profit percentage necessary to figure your installment sale income (gain) for this year. H and r block Worksheet A. H and r block Figuring Adjusted Basis and Gross Profit Percentage 1. H and r block Enter the selling price for the property   2. H and r block Enter your adjusted basis for the property     3. H and r block Enter your selling expenses     4. H and r block Enter any depreciation recapture     5. H and r block Add lines 2, 3, and 4. H and r block  This is your adjusted basis for installment sale purposes   6. H and r block Subtract line 5 from line 1. H and r block If zero or less, enter -0-. H and r block  This is your gross profit     If the amount entered on line 6 is zero, stop here. H and r block You cannot use the installment method. H and r block   7. H and r block Enter the contract price for the property   8. H and r block Divide line 6 by line 7. H and r block This is your gross profit percentage   Selling price. H and r block   The selling price is the total cost of the property to the buyer and includes any of the following. H and r block Any money you are to receive. H and r block The fair market value (FMV) of any property you are to receive (FMV is discussed in Property Used As a Payment under Other Rules, later). H and r block Any existing mortgage or other debt the buyer pays, assumes, or takes (a note, mortgage, or any other liability, such as a lien, accrued interest, or taxes you owe on the property). H and r block Any of your selling expenses the buyer pays. H and r block   Do not include stated interest, unstated interest, any amount recomputed or recharacterized as interest, or original issue discount. H and r block Adjusted basis for installment sale purposes. H and r block   Your adjusted basis is the total of the following three items. H and r block Adjusted basis. H and r block Selling expenses. H and r block Depreciation recapture. H and r block Adjusted basis. H and r block   Basis is your investment in the property for installment sale purposes. H and r block The way you figure basis depends on how you acquire the property. H and r block The basis of property you buy is generally its cost. H and r block The basis of property you inherit, receive as a gift, build yourself, or receive in a tax-free exchange is figured differently. H and r block   While you own property, various events may change your original basis. H and r block Some events, such as adding rooms or making permanent improvements, increase basis. H and r block Others, such as deductible casualty losses or depreciation previously allowed or allowable, decrease basis. H and r block The result is adjusted basis. H and r block   For more information on how to figure basis and adjusted basis, see Publication 551. H and r block For more information regarding your basis in property you inherited from someone who died in 2010 and whose executor filed Form 8939, Allocation of Increase In Basis for Property Acquired From a Decedent, see Publication 4895. H and r block Selling expenses. H and r block   Selling expenses relate to the sale of the property. H and r block They include commissions, attorney fees, and any other expenses paid on the sale. H and r block Selling expenses are added to the basis of the sold property. H and r block Depreciation recapture. H and r block   If the property you sold was depreciable property, you may need to recapture part of the gain on the sale as ordinary income. H and r block See Depreciation Recapture Income under Other Rules, later. H and r block Gross profit. H and r block   Gross profit is the total gain you report on the installment method. H and r block   To figure your gross profit, subtract your adjusted basis for installment sale purposes from the selling price. H and r block If the property you sold was your home, subtract from the gross profit any gain you can exclude. H and r block See Sale of Your Home , later, under Reporting Installment Sale Income. H and r block Contract price. H and r block   Contract price equals: The selling price, minus The mortgages, debts, and other liabilities assumed or taken by the buyer, plus The amount by which the mortgages, debts, and other liabilities assumed or taken by the buyer exceed your adjusted basis for installment sale purposes. H and r block Gross profit percentage. H and r block   A certain percentage of each payment (after subtracting interest) is reported as installment sale income. H and r block This percentage is called the gross profit percentage and is figured by dividing your gross profit from the sale by the contract price. H and r block   The gross profit percentage generally remains the same for each payment you receive. H and r block However, see the Example under Selling Price Reduced, later, for a situation where the gross profit percentage changes. H and r block Example. H and r block You sell property at a contract price of $6,000 and your gross profit is $1,500. H and r block Your gross profit percentage is 25% ($1,500 ÷ $6,000). H and r block After subtracting interest, you report 25% of each payment, including the down payment, as installment sale income from the sale for the tax year you receive the payment. H and r block The remainder (balance) of each payment is the tax-free return of your adjusted basis. H and r block Amount to report as installment sale income. H and r block   Multiply the payments you receive each year (less interest) by the gross profit percentage. H and r block The result is your installment sale income for the tax year. H and r block In certain circumstances, you may be treated as having received a payment, even though you received nothing directly. H and r block A receipt of property or the assumption of a mortgage on the property sold may be treated as a payment. H and r block For a detailed discussion, see Payments Received or Considered Received under Other Rules, later. H and r block Selling Price Reduced If the selling price is reduced at a later date, the gross profit on the sale also will change. H and r block You then must refigure the gross profit percentage for the remaining payments. H and r block Refigure your gross profit using Worksheet B. H and r block You will spread any remaining gain over future installments. H and r block Worksheet B. H and r block New Gross Profit Percentage — Selling Price Reduced 1. H and r block Enter the reduced selling  price for the property   2. H and r block Enter your adjusted  basis for the  property     3. H and r block Enter your selling  expenses     4. H and r block Enter any depreciation  recapture     5. H and r block Add lines 2, 3, and 4. H and r block   6. H and r block Subtract line 5 from line 1. H and r block  This is your adjusted  gross profit   7. H and r block Enter any installment sale  income reported in  prior year(s)   8. H and r block Subtract line 7 from line 6   9. H and r block Future installments   10. H and r block Divide line 8 by line 9. H and r block  This is your new gross profit percentage*   * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. H and r block Example. H and r block In 2011, you sold land with a basis of $40,000 for $100,000. H and r block Your gross profit was $60,000. H and r block You received a $20,000 down payment and the buyer's note for $80,000. H and r block The note provides for four annual payments of $20,000 each, plus 8% interest, beginning in 2012. H and r block Your gross profit percentage is 60%. H and r block You reported a gain of $12,000 on each payment received in 2011 and 2012. H and r block In 2013, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2013, 2014, and 2015 are reduced to $15,000 for each year. H and r block The new gross profit percentage, 46. H and r block 67%, is figured on Example—Worksheet B. H and r block You will report a gain of $7,000 (46. H and r block 67% of $15,000) on each of the $15,000 installments due in 2013, 2014, and 2015. H and r block Example — Worksheet B. H and r block New Gross Profit Percentage — Selling Price Reduced 1. H and r block Enter the reduced selling  price for the property 85,000 2. H and r block Enter your adjusted  basis for the  property 40,000   3. H and r block Enter your selling  expenses -0-   4. H and r block Enter any depreciation  recapture -0-   5. H and r block Add lines 2, 3, and 4. H and r block 40,000 6. H and r block Subtract line 5 from line 1. H and r block  This is your adjusted  gross profit 45,000 7. H and r block Enter any installment sale  income reported in  prior year(s) 24,000 8. H and r block Subtract line 7 from line 6 21,000 9. H and r block Future installments 45,000 10. H and r block Divide line 8 by line 9. H and r block  This is your new gross profit percentage* 46. H and r block 67% * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. H and r block Reporting Installment Sale Income Generally, you will use Form 6252 to report installment sale income from casual sales of real or personal property during the tax year. H and r block You also will have to report the installment sale income on Schedule D (Form 1040), Capital Gains and Losses, or Form 4797, or both. H and r block See Schedule D (Form 1040) and Form 4797 , later. H and r block If the property was your main home, you may be able to exclude part or all of the gain. H and r block See Sale of Your Home , later. H and r block Form 6252 Use Form 6252 to report an installment sale in the year it takes place and to report payments received, or considered received because of related party resales, in later years. H and r block Attach it to your tax return for each year. H and r block Form 6252 will help you determine the gross profit, contract price, gross profit percentage, and installment sale income. H and r block Which parts to complete. H and r block   Which part to complete depends on whether you are filing the form for the year of sale or a later year. H and r block Year of sale. H and r block   Complete lines 1 through 4, Part I, and Part II. H and r block If you sold property to a related party during the year, also complete Part III. H and r block Later years. H and r block   Complete lines 1 through 4 and Part II for any year in which you receive a payment from an installment sale. H and r block   If you sold a marketable security to a related party after May 14, 1980, and before January 1, 1987, complete Form 6252 for each year of the installment agreement, even if you did not receive a payment. H and r block (After December 31, 1986, the installment method is not available for the sale of marketable securities. H and r block ) Complete lines 1 through 4 and Part II for any year in which you receive a payment from the sale. H and r block Complete Part III unless you received the final payment during the tax year. H and r block   If you sold property other than a marketable security to a related party after May 14, 1980, complete Form 6252 for the year of sale and for 2 years after the year of sale, even if you did not receive a payment. H and r block Complete lines 1 through 4 and Part II for any year during this 2-year period in which you receive a payment from the sale. H and r block Complete Part III for the 2 years after the year of sale unless you received the final payment during the tax year. H and r block Schedule D (Form 1040) Enter the gain figured on Form 6252 (line 26) for personal-use property (capital assets) on Schedule D (Form 1040), as a short-term gain (line 4) or long-term gain (line 11). H and r block If your gain from the installment sale qualifies for long-term capital gain treatment in the year of sale, it will continue to qualify in later tax years. H and r block Your gain is long-term if you owned the property for more than 1 year when you sold it. H and r block Form 4797 An installment sale of property used in your business or that earns rent or royalty income may result in a capital gain, an ordinary gain, or both. H and r block All or part of any gain from the disposition of the property may be ordinary gain from depreciation recapture. H and r block For trade or business property held for more than 1 year, enter the amount from line 26 of Form 6252 on Form 4797, line 4. H and r block If the property was held 1 year or less or you have an ordinary gain from the sale of a noncapital asset (even if the holding period is more than 1 year), enter this amount on Form 4797, line 10, and write “From Form 6252. H and r block ” Sale of Your Home If you sell your home, you may be able to exclude all or part of the gain on the sale. H and r block See Publication 523 for information about excluding the gain. H and r block If the sale is an installment sale, any gain you exclude is not included in gross profit when figuring your gross profit percentage. H and r block Seller-financed mortgage. H and r block   If you finance the sale of your home to an individual, both you and the buyer may have to follow special reporting procedures. H and r block   When you report interest income received from a buyer who uses the property as a personal residence, write the buyer's name, address, and social security number (SSN) on line 1 of Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. H and r block   When deducting the mortgage interest, the buyer must write your name, address, and SSN on line 11 of Schedule A (Form 1040), Itemized Deductions. H and r block   If either person fails to include the other person's SSN, a $50 penalty will be assessed. H and r block Other Rules The rules discussed in this part of the publication apply only in certain circumstances or to certain types of property. H and r block The following topics are discussed. H and r block Electing out of the installment method. H and r block Payments received or considered received. H and r block Escrow account. H and r block Depreciation recapture income. H and r block Sale to a related person. H and r block Like-kind exchange. H and r block Contingent payment sale. H and r block Single sale of several assets. H and r block Sale of a business. H and r block Unstated interest and original issue discount. H and r block Disposition of an installment obligation. H and r block Repossession. H and r block Interest on deferred tax. H and r block Electing Out of the Installment Method If you elect not to use the installment method, you generally report the entire gain in the year of sale, even though you do not receive all the sale proceeds in that year. H and r block To figure the amount of gain to report, use the fair market value (FMV) of the buyer's installment obligation that represents the buyer's debt to you. H and r block Notes, mortgages, and land contracts are examples of obligations that are included at FMV. H and r block You must figure the FMV of the buyer's installment obligation, whether or not you would actually be able to sell it. H and r block If you use the cash method of accounting, the FMV of the obligation will never be considered to be less than the FMV of the property sold (minus any other consideration received). H and r block Example. H and r block You sold a parcel of land for $50,000. H and r block You received a $10,000 down payment and will receive the balance over the next 10 years at $4,000 a year, plus 8% interest. H and r block The buyer gave you a note for $40,000. H and r block The note had an FMV of $40,000. H and r block You paid a commission of 6%, or $3,000, to a broker for negotiating the sale. H and r block The land cost $25,000, and you owned it for more than one year. H and r block You decide to elect out of the installment method and report the entire gain in the year of sale. H and r block Gain realized:     Selling price $50,000 Minus: Property's adj. H and r block basis $25,000     Commission 3,000 28,000 Gain realized $22,000 Gain recognized in year of sale:   Cash $10,000 Market value of note 40,000 Total realized in year of sale $50,000 Minus: Property's adj. H and r block basis $25,000     Commission 3,000 28,000 Gain recognized $22,000 The recognized gain of $22,000 is long-term capital gain. H and r block You include the entire gain in income in the year of sale, so you do not include in income any principal payments you receive in later tax years. H and r block The interest on the note is ordinary income and is reported as interest income each year. H and r block How to elect out. H and r block   To make this election, do not report your sale on Form 6252. H and r block Instead, report it on Form 8949, Sales and Other Dispositions of Capital Assets, Form 4797, or both. H and r block When to elect out. H and r block   Make this election by the due date, including extensions, for filing your tax return for the year the sale takes place. H and r block Automatic six-month extension. H and r block   If you timely file your tax return without making the election, you still can make the election by filing an amended return within 6 months of the due date of your return (excluding extensions). H and r block Write “Filed pursuant to section 301. H and r block 9100-2” at the top of the amended return and file it where the original return was filed. H and r block Revoking the election. H and r block   Once made, the election can be revoked only with IRS approval. H and r block A revocation is retroactive. H and r block You will not be allowed to revoke the election if either of the following applies. H and r block One of the purposes is to avoid federal income tax. H and r block The tax year in which any payment was received has closed. H and r block Payments Received or Considered Received You must figure your gain each year on the payments you receive, or are treated as receiving, from an installment sale. H and r block In certain situations, you are considered to have received a payment, even though the buyer does not pay you directly. H and r block These situations occur when the buyer assumes or pays any of your debts, such as a loan, or pays any of your expenses, such as a sales commission. H and r block However, as discussed later, the buyer's assumption of your debt is treated as a recovery of your basis rather than as a payment in many cases. H and r block Buyer Pays Seller's Expenses If the buyer pays any of your expenses related to the sale of your property, it is considered a payment to you in the year of sale. H and r block Include these expenses in the selling and contract prices when figuring the gross profit percentage. H and r block Buyer Assumes Mortgage If the buyer assumes or pays off your mortgage, or otherwise takes the property subject to the mortgage, the following rules apply. H and r block Mortgage not more than basis. H and r block   If the buyer assumes a mortgage that is not more than your installment sale basis in the property, it is not considered a payment to you. H and r block It is considered a recovery of your basis. H and r block The contract price is the selling price minus the mortgage. H and r block Example. H and r block You sell property with an adjusted basis of $19,000. H and r block You have selling expenses of $1,000. H and r block The buyer assumes your existing mortgage of $15,000 and agrees to pay you $10,000 (a cash down payment of $2,000 and $2,000 (plus 12% interest) in each of the next 4 years). H and r block The selling price is $25,000 ($15,000 + $10,000). H and r block Your gross profit is $5,000 ($25,000 − $20,000 installment sale basis). H and r block The contract price is $10,000 ($25,000 − $15,000 mortgage). H and r block Your gross profit percentage is 50% ($5,000 ÷ $10,000). H and r block You report half of each $2,000 payment received as gain from the sale. H and r block You also report all interest you receive as ordinary income. H and r block Mortgage more than basis. H and r block   If the buyer assumes a mortgage that is more than your installment sale basis in the property, you recover your entire basis. H and r block The part of the mortgage greater than your basis is treated as a payment received in the year of sale. H and r block   To figure the contract price, subtract the mortgage from the selling price. H and r block This is the total amount (other than interest) you will receive directly from the buyer. H and r block Add to this amount the payment you are considered to have received (the difference between the mortgage and your installment sale basis). H and r block The contract price is then the same as your gross profit from the sale. H and r block    If the mortgage the buyer assumes is equal to or more than your installment sale basis, the gross profit percentage always will be 100%. H and r block Example. H and r block The selling price for your property is $9,000. H and r block The buyer will pay you $1,000 annually (plus 8% interest) over the next 3 years and assume an existing mortgage of $6,000. H and r block Your adjusted basis in the property is $4,400. H and r block You have selling expenses of $600, for a total installment sale basis of $5,000. H and r block The part of the mortgage that is more than your installment sale basis is $1,000 ($6,000 − $5,000). H and r block This amount is included in the contract price and treated as a payment received in the year of sale. H and r block The contract price is $4,000: Selling price $9,000 Minus: Mortgage (6,000) Amount actually received $3,000 Add difference:   Mortgage $6,000   Minus: Installment sale basis 5,000 1,000 Contract price $4,000       Your gross profit on the sale is also $4,000: Selling price $9,000 Minus: Installment sale basis (5,000) Gross profit $4,000 Your gross profit percentage is 100%. H and r block Report 100% of each payment (less interest) as gain from the sale. H and r block Treat the $1,000 difference between the mortgage and your installment sale basis as a payment and report 100% of it as gain in the year of sale. H and r block Mortgage Canceled If the buyer of your property is the person who holds the mortgage on it, your debt is canceled, not assumed. H and r block You are considered to receive a payment equal to the outstanding canceled debt. H and r block Example. H and r block Mary Jones loaned you $45,000 in 2009 in exchange for a note and a mortgage in a tract of land you owned. H and r block On April 4, 2013, she bought the land for $70,000. H and r block At that time, $30,000 of her loan to you was outstanding. H and r block She agreed to forgive this $30,000 debt and to pay you $20,000 (plus interest) on August 1, 2013, and $20,000 on August 1, 2014. H and r block She did not assume an existing mortgage. H and r block She canceled the $30,000 debt you owed her. H and r block You are considered to have received a $30,000 payment at the time of the sale. H and r block Buyer Assumes Other Debts If the buyer assumes any other debts, such as a loan or back taxes, it may be considered a payment to you in the year of sale. H and r block If the buyer assumes the debt instead of paying it off, only part of it may have to be treated as a payment. H and r block Compare the debt to your installment sale basis in the property being sold. H and r block If the debt is less than your installment sale basis, none of it is treated as a payment. H and r block If it is more, only the difference is treated as a payment. H and r block If the buyer assumes more than one debt, any part of the total that is more than your installment sale basis is considered a payment. H and r block These rules are the same as the rules discussed earlier under Buyer Assumes Mortgage . H and r block However, they apply only to the following types of debt the buyer assumes. H and r block Those acquired from ownership of the property you are selling, such as a mortgage, lien, overdue interest, or back taxes. H and r block Those acquired in the ordinary course of your business, such as a balance due for inventory you purchased. H and r block If the buyer assumes any other type of debt, such as a personal loan or your legal fees relating to the sale, it is treated as if the buyer had paid off the debt at the time of the sale. H and r block The value of the assumed debt is then considered a payment to you in the year of sale. H and r block Property Used As a Payment If you receive property other than money from the buyer, it is still considered a payment in the year received. H and r block However, see Like-Kind Exchange , later. H and r block Generally, the amount of the payment is the property's FMV on the date you receive it. H and r block Exception. H and r block   If the property the buyer gives you is payable on demand or readily tradable, the amount you should consider as payment in the year received is: The FMV of the property on the date you receive it if you use the cash method of accounting, The face amount of the obligation on the date you receive it if you use the accrual method of accounting, or The stated redemption price at maturity less any original issue discount (OID) or, if there is no OID, the stated redemption price at maturity appropriately discounted to reflect total unstated interest. H and r block See Unstated Interest and Original Issue Discount (OID) , later. H and r block Debt not payable on demand. H and r block   Any evidence of debt you receive from the buyer not payable on demand is not considered a payment. H and r block This is true even if the debt is guaranteed by a third party, including a government agency. H and r block Fair market value (FMV). H and r block   This is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of all the necessary facts. H and r block Third-party note. H and r block   If the property the buyer gives you is a third-party note (or other obligation of a third party), you are considered to have received a payment equal to the note's FMV. H and r block Because the FMV of the note is itself a payment on your installment sale, any payments you later receive from the third party are not considered payments on the sale. H and r block The excess of the note's face value over its FMV is interest. H and r block Exclude this interest in determining the selling price of the property. H and r block However, see Exception under Property Used As a Payment, earlier. H and r block Example. H and r block You sold real estate in an installment sale. H and r block As part of the down payment, the buyer assigned to you a $50,000, 8% interest third-party note. H and r block The FMV of the third-party note at the time of the sale was $30,000. H and r block This amount, not $50,000, is a payment to you in the year of sale. H and r block The third-party note had an FMV equal to 60% of its face value ($30,000 ÷ $50,000), so 60% of each principal payment you receive on this note is a nontaxable return of capital. H and r block The remaining 40% is interest taxed as ordinary income. H and r block Bond. H and r block   A bond or other evidence of debt you receive from the buyer that is payable on demand or readily tradable in an established securities market is treated as a payment in the year you receive it. H and r block For more information on the amount you should treat as a payment, see Exception under Property Used As a Payment, earlier. H and r block    If you receive a government or corporate bond for a sale before October 22, 2004, and the bond has interest coupons attached or can be readily traded in an established securities market, you are considered to have received payment equal to the bond's FMV. H and r block However, see Exception under Property Used As a Payment, earlier. H and r block Buyer's note. H and r block   The buyer's note (unless payable on demand) is not considered payment on the sale. H and r block However, its full face value is included when figuring the selling price and the contract price. H and r block Payments you receive on the note are used to figure your gain in the year received. H and r block Installment Obligation Used as Security (Pledge Rule) If you use an installment obligation to secure any debt, the net proceeds from the debt may be treated as a payment on the installment obligation. H and r block This is known as the pledge rule, and it applies if the selling price of the property is over $150,000. H and r block It does not apply to the following dispositions. H and r block Sales of property used or produced in farming. H and r block Sales of personal-use property. H and r block Qualifying sales of time-shares and residential lots. H and r block The net debt proceeds are the gross debt minus the direct expenses of getting the debt. H and r block The amount treated as a payment is considered received on the later of the following dates. H and r block The date the debt becomes secured. H and r block The date you receive the debt proceeds. H and r block A debt is secured by an installment obligation to the extent that payment of principal or interest on the debt is directly secured (under the terms of the loan or any underlying arrangement) by any interest in the installment obligation. H and r block For sales after December 16, 1999, payment on a debt is treated as directly secured by an interest in an installment obligation to the extent an arrangement allows you to satisfy all or part of the debt with the installment obligation. H and r block Limit. H and r block   The net debt proceeds treated as a payment on the pledged installment obligation cannot be more than the excess of item (1) over item (2), below. H and r block The total contract price on the installment sale. H and r block Any payments received on the installment obligation before the date the net debt proceeds are treated as a payment. H and r block Installment payments. H and r block   The pledge rule accelerates the reporting of the installment obligation payments. H and r block Do not report payments received on the obligation after it has been pledged until the payments received exceed the amount reported under the pledge rule. H and r block Exception. H and r block   The pledge rule does not apply to pledges made after December 17, 1987, to refinance a debt under the following circumstances. H and r block The debt was outstanding on December 17, 1987. H and r block The debt was secured by that installment sale obligation on that date and at all times thereafter until the refinancing occurred. H and r block   A refinancing as a result of the creditor's calling of the debt is treated as a continuation of the original debt so long as a person other than the creditor or a person related to the creditor provides the refinancing. H and r block   This exception applies only to refinancing that does not exceed the principal of the original debt immediately before the refinancing. H and r block Any excess is treated as a payment on the installment obligation. H and r block Escrow Account In some cases, the sales agreement or a later agreement may call for the buyer to establish an irrevocable escrow account from which the remaining installment payments (including interest) are to be made. H and r block These sales cannot be reported on the installment method. H and r block The buyer's obligation is paid in full when the balance of the purchase price is deposited into the escrow account. H and r block When an escrow account is established, you no longer rely on the buyer for the rest of the payments, but on the escrow arrangement. H and r block Example. H and r block You sell property for $100,000. H and r block The sales agreement calls for a down payment of $10,000 and payment of $15,000 in each of the next 6 years to be made from an irrevocable escrow account containing the balance of the purchase price plus interest. H and r block You cannot report the sale on the installment method because the full purchase price is considered received in the year of sale. H and r block You report the entire gain in the year of sale. H and r block Escrow established in a later year. H and r block   If you make an installment sale and in a later year an irrevocable escrow account is established to pay the remaining installments plus interest, the amount placed in the escrow account represents payment of the balance of the installment obligation. H and r block Substantial restriction. H and r block   If an escrow arrangement imposes a substantial restriction on your right to receive the sale proceeds, the sale can be reported on the installment method, provided it otherwise qualifies. H and r block For an escrow arrangement to impose a substantial restriction, it must serve a bona fide purpose of the buyer, that is, a real and definite restriction placed on the seller or a specific economic benefit conferred on the buyer. H and r block Depreciation Recapture Income If you sell property for which you claimed or could have claimed a depreciation deduction, you must report any depreciation recapture income in the year of sale, whether or not an installment payment was received that year. H and r block Figure your depreciation recapture income (including the section 179 deduction and the section 179A deduction recapture) in Part III of Form 4797. H and r block Report the recapture income in Part II of Form 4797 as ordinary income in the year of sale. H and r block The recapture income is also included in Part I of Form 6252. H and r block However, the gain equal to the recapture income is reported in full in the year of the sale. H and r block Only the gain greater than the recapture income is reported on the installment method. H and r block For more information on depreciation recapture, see chapter 3 in Publication 544. H and r block The recapture income reported in the year of sale is included in your installment sale basis in determining your gross profit on the installment sale. H and r block Determining gross profit is discussed under General Rules , earlier. H and r block Sale to a Related Person If you sell depreciable property to a related person and the sale is an installment sale, you may not be able to report the sale using the installment method. H and r block If you sell property to a related person and the related person disposes of the property before you receive all payments with respect to the sale, you may have to treat the amount realized by the related person as received by you when the related person disposes of the property. H and r block These rules are explained under Sale of Depreciable Property and under Sale and Later Disposition , later. H and r block Sale of Depreciable Property If you sell depreciable property to certain related persons, you generally cannot report the sale using the installment method. H and r block Instead, all payments to be received are considered received in the year of sale. H and r block However, see Exception , below. H and r block Depreciable property for this rule is any property the purchaser can depreciate. H and r block Payments to be received include the total of all noncontingent payments and the FMV of any payments contingent as to amount. H and r block In the case of contingent payments for which the FMV cannot be reasonably determined, your basis in the property is recovered proportionately. H and r block The purchaser cannot increase the basis of the property acquired in the sale before the seller includes a like amount in income. H and r block Exception. H and r block   You can use the installment method to report a sale of depreciable property to a related person if no significant tax deferral benefit will be derived from the sale. H and r block You must show to the satisfaction of the IRS that avoidance of federal income tax was not one of the principal purposes of the sale. H and r block Related person. H and r block   Related persons include the following. H and r block A person and all controlled entities with respect to that person. H and r block A taxpayer and any trust in which such taxpayer (or his spouse) is a beneficiary, unless that beneficiary's interest in the trust is a remote contingent interest. H and r block Except in the case of a sale or exchange in satisfaction of a pecuniary bequest, an executor of an estate and a beneficiary of that estate. H and r block Two or more partnerships in which the same person owns, directly or indirectly, more than 50% of the capital interests or the profits interests. H and r block   For information about which entities are controlled entities, see section 1239(c). H and r block Sale and Later Disposition Generally, a special rule applies if you sell or exchange property to a related person on the installment method (first disposition) who then sells, exchanges, or gives away the property (second disposition) under the following circumstances. H and r block The related person makes the second disposition before making all payments on the first disposition. H and r block The related person disposes of the property within 2 years of the first disposition. H and r block This rule does not apply if the property involved is marketable securities. H and r block Under this rule, you treat part or all of the amount the related person realizes (or the FMV if the disposed property is not sold or exchanged) from the second disposition as if you received it at the time of the second disposition. H and r block See Exception , later. H and r block Related person. H and r block   Related persons include the following. H and r block Members of a family, including only brothers and sisters (either whole or half), husband and wife, ancestors, and lineal descendants. H and r block A partnership or estate and a partner or beneficiary. H and r block A trust (other than a section 401(a) employees trust) and a beneficiary. H and r block A trust and an owner of the trust. H and r block Two corporations that are members of the same controlled group as defined in section 267(f). H and r block The fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. H and r block A tax-exempt educational or charitable organization and a person (if an individual, including members of the individual's family) who directly or indirectly controls such an organization. H and r block An individual and a corporation when the individual owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. H and r block A fiduciary of a trust and a corporation when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. H and r block The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. H and r block Any two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. H and r block An S corporation and a corporation that is not an S corporation if the same persons own more than 50% in value of the outstanding stock of each corporation. H and r block A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. H and r block An executor and a beneficiary of an estate unless the sale is in satisfaction of a pecuniary bequest. H and r block Example 1. H and r block In 2012, Harvey Green sold farm land to his son Bob for $500,000, which was to be paid in five equal payments over 5 years, plus adequate stated interest on the balance due. H and r block His installment sale basis for the farm land was $250,000 and the property was not subject to any outstanding liens or mortgages. H and r block His gross profit percentage is 50% (gross profit of $250,000 ÷ contract price of $500,000). H and r block He received $100,000 in 2012 and included $50,000 in income for that year ($100,000 × 0. H and r block 50). H and r block Bob made no improvements to the property and sold it to Alfalfa Inc. H and r block , in 2013 for $600,000 after making the payment for that year. H and r block The amount realized from the second disposition is $600,000. H and r block Harvey figures his installment sale income for 2013 as follows: Lesser of: 1) Amount realized on second disposition, or 2) Contract price on first disposition $500,000 Subtract: Sum of payments from Bob in 2012 and 2013 - 200,000 Amount treated as received because of second disposition $300,000 Add: Payment from Bob in 2013 + 100,000 Total payments received and treated as received for 2013 $400,000 Multiply by gross profit % × . H and r block 50 Installment sale income for 2013 $200,000 Harvey will not include in his installment sale income any principal payments he receives on the installment obligation for 2014, 2015, and 2016 because he has already reported the total payments of $500,000 from the first disposition ($100,000 in 2012 and $400,000 in 2013). H and r block Example 2. H and r block Assume the facts are the same as Example 1 except that Bob sells the property for only $400,000. H and r block The gain for 2013 is figured as follows: Lesser of: 1) Amount realized on second disposition, or 2) Contract price on first disposition $400,000 Subtract: Sum of payments from Bob in 2012 and 2013 − 200,000 Amount treated as received because of second disposition $200,000 Add: Payment from Bob in 2013 + 100,000 Total payments received and treated as received for 2013 $300,000 Multiply by gross profit % × . H and r block 50 Installment sale income for 2013 $150,000     Harvey receives a $100,000 payment in 2014 and another in 2015. H and r block They are not taxed because he treated the $200,000 from the disposition in 2013 as a payment received and paid tax on the installment sale income. H and r block In 2016, he receives the final $100,000 payment. H and r block He figures the installment sale income he must recognize in 2016 as follows: Total payments from the first disposition received by the end of 2016 $500,000 Minus the sum of:     Payment from 2012 $100,000   Payment from 2013 100,000   Amount treated as received in 2013 200,000   Total on which gain was previously recognized  − 400,000 Payment on which gain is recognized for 2016  $100,000 Multiply by gross profit % × . H and r block 50 Installment sale income for 2016 $ 50,000 Exception. H and r block   This rule does not apply to a second disposition, and any later transfer, if you can show to the satisfaction of the IRS that neither the first disposition (to the related person) nor the second disposition had as one of its principal purposes the avoidance of federal income tax. H and r block Generally, an involuntary second disposition will qualify under the nontax avoidance exception, such as when a creditor of the related person forecloses on the property or the related person declares bankruptcy. H and r block   The nontax avoidance exception also applies to a second disposition that is also an installment sale if the terms of payment under the installment resale are substantially equal to or longer than those for the first installment sale. H and r block However, the exception does not apply if the resale terms permit significant deferral of recognition of gain from the first sale. H and r block   In addition, any sale or exchange of stock to the issuing corporation is not treated as a first disposition. H and r block An involuntary conversion is not treated as a second disposition if the first disposition occurred before the threat of conversion. H and r block A transfer after the death of the person making the first disposition or the related person's death, whichever is earlier, is not treated as a second disposition. H and r block Like-Kind Exchange If you trade business or investment property solely for the same kind of property to be held as business or investment property, you can postpone reporting the gain. H and r block These trades are known as like-kind exchanges. H and r block The property you receive in a like-kind exchange is treated as if it were a continuation of the property you gave up. H and r block You do not have to report any part of your gain if you receive only like-kind property. H and r block However, if you also receive money or other property (boot) in the exchange, you must report your gain to the extent of the money and the FMV of the other property received. H and r block For more information on like-kind exchanges, see Like-Kind Exchanges in chapter 1 of Publication 544. H and r block Installment payments. H and r block   If, in addition to like-kind property, you receive an installment obligation in the exchange, the following rules apply to determine the installment sale income each year. H and r block The contract price is reduced by the FMV of the like-kind property received in the trade. H and r block The gross profit is reduced by any gain on the trade that can be postponed. H and r block Like-kind property received in the trade is not considered payment on the installment obligation. H and r block Example. H and r block In 2013, George Brown trades personal property with an installment sale basis of $400,000 for like-kind property having an FMV of $200,000. H and r block He also receives an installment note for $800,000 in the trade. H and r block Under the terms of the note, he is to receive $100,000 (plus interest) in 2014 and the balance of $700,000 (plus interest) in 2015. H and r block George's selling price is $1,000,000 ($800,000 installment note + $200,000 FMV of like-kind property received). H and r block His gross profit is $600,000 ($1,000,000 − $400,000 installment sale basis). H and r block The contract price is $800,000 ($1,000,000 − $200,000). H and r block The gross profit percentage is 75% ($600,000 ÷ $800,000). H and r block He reports no gain in 2013 because the like-kind property he receives is not treated as a payment for figuring gain. H and r block He reports $75,000 gain for 2014 (75% of $100,000 payment received) and $525,000 gain for 2015 (75% of $700,000 payment received). H and r block Deferred exchanges. H and r block   A deferred exchange is one in which you transfer property you use in business or hold for investment and receive like-kind property later that you will use in business or hold for investment. H and r block Under this type of exchange, the person receiving your property may be required to place funds in an escrow account or trust. H and r block If certain rules are met, these funds will not be considered a payment until you have the right to receive the funds or, if earlier, the end of the exchange period. H and r block See Regulations section 1. H and r block 1031(k)-1(j)(2) for these rules. H and r block Contingent Payment Sale A contingent payment sale is one in which the total selling price cannot be determined by the end of the tax year of sale. H and r block This happens, for example, if you sell your business and the selling price includes a percentage of its profits in future years. H and r block If the selling price cannot be determined by the end of the tax year, you must use different rules to figure the contract price and the gross profit percentage than those you use for an installment sale with a fixed selling price. H and r block For rules on using the installment method for a contingent payment sale, see Regulations section 15a. H and r block 453-1(c). H and r block Single Sale of Several Assets If you sell different types of assets in a single sale, you must identify each asset to determine whether you can use the installment method to report the sale of that asset. H and r block You also have to allocate part of the selling price to each asset. H and r block If you sell assets that constitute a trade or business, see Sale of a Business , later. H and r block Unless an allocation of the selling price has been agreed to by both parties in an arm's-length transaction, you must allocate the selling price to an asset based on its FMV. H and r block If the buyer assumes a debt, or takes the property subject to a debt, you must reduce the FMV of the property by the debt. H and r block This becomes the net FMV. H and r block A sale of separate and unrelated assets of the same type under a single contract is reported as one transaction for the installment method. H and r block However, if an asset is sold at a loss, its disposition cannot be reported on the installment method. H and r block It must be reported separately. H and r block The remaining assets sold at a gain are reported together. H and r block Example. H and r block You sold three separate and unrelated parcels of real property (A, B, and C) under a single contract calling for a total selling price of $130,000. H and r block The total selling price consisted of a cash payment of $20,000, the buyer's assumption of a $30,000 mortgage on parcel B, and an installment obligation of $80,000 payable in eight annual installments, plus interest at 8% a year. H and r block Your installment sale basis for each parcel was $15,000. H and r block Your net gain was $85,000 ($130,000 − $45,000). H and r block You report the gain on the installment method. H and r block The sales contract did not allocate the selling price or the cash payment received in the year of sale among the individual parcels. H and r block The FMV of parcels A, B, and C were $60,000, $60,000, and $10,000, respectively. H and r block The installment sale basis for parcel C was more than its FMV, so it was sold at a loss and must be treated separately. H and r block You must allocate the total selling price and the amounts received in the year of sale between parcel C and the remaining parcels. H and r block Of the total $130,000 selling price, you must allocate $120,000 to parcels A and B together and $10,000 to parcel C. H and r block You should allocate the cash payment of $20,000 received in the year of sale and the note receivable on the basis of their proportionate net FMV. H and r block The allocation is figured as follows:   Parcels   A and B Parcel C FMV $120,000 $10,000 Minus: Mortgage assumed 30,000 -0- Net FMV $ 90,000 $10,000 Proportionate net FMV:     Percentage of total 90% 10% Payments in year of sale:     $20,000 × 90% $18,000   $20,000 × 10%   $2,000 Excess of parcel B mortgage over installment sale basis 15,000 -0- Allocation of payments  received (or considered  received) in year of sale $ 33,000 $ 2,000 You cannot report the sale of parcel C on the installment method because the sale results in a loss. H and r block You report this loss of $5,000 ($10,000 selling price − $15,000 installment sale basis) in the year of sale. H and r block However, if parcel C was held for personal use, the loss is not deductible. H and r block You allocate the installment obligation of $80,000 to the properties sold based on their proportionate net FMVs (90% to parcels A and B, 10% to parcel C). H and r block Sale of a Business The installment sale of an entire business for one overall price under a single contract is not the sale of a single asset. H and r block Allocation of Selling Price To determine whether any of the gain on the sale of the business can be reported on the installment method, you must allocate the total selling price and the payments received in the year of sale between each of the following classes of assets. H and r block Assets sold at a loss. H and r block Real and personal property eligible for the installment method. H and r block Real and personal property ineligible for the installment method, including: Inventory, Dealer property, and Stocks and securities. H and r block Inventory. H and r block   The sale of inventories of personal property cannot be reported on the installment method. H and r block All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years. H and r block   If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. H and r block If you do not, each payment must be allocated between the inventory and the other assets sold. H and r block   Report the amount you receive (or will receive) on the sale of inventory items as ordinary business income. H and r block Use your basis in the inventory to figure the cost of goods sold. H and r block Deduct the part of the selling expenses allocated to inventory as an ordinary business expense. H and r block Residual method. H and r block   Except for assets exchanged under the like-kind exchange rules, both the buyer and seller of a business must use the residual method to allocate the sale price to each business asset sold. H and r block This method determines gain or loss from the transfer of each asset and the buyer's basis in the assets. H and r block   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. H and r block This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b). H and r block   A group of assets constitutes a trade or business if goodwill or going concern value could, under any circumstances, attach to the assets or if the use of the assets would constitute an active trade or business under section 355. H and r block   The residual method provides for the consideration to be reduced first by cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). H and r block The consideration remaining after this reduction must be allocated among the various business assets in a certain order. H and r block   For asset acquisitions occurring after March 15, 2001, make the allocation among the following assets in proportion to (but not more than) their fair market value on the purchase date in the following order. H and r block Certificates of deposit, U. H and r block S. H and r block Government securities, foreign currency, and actively traded personal property, including stock and securities. H and r block Accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. H and r block However, see Regulations section 1. H and r block 338-6(b)(2)(iii) for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. H and r block Property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. H and r block All other assets except section 197 intangibles. H and r block Section 197 intangibles except goodwill and going concern value. H and r block Goodwill and going concern value (whether or not they qualify as section 197 intangibles). H and r block   If an asset described in (1) through (6) is includible in more than one category, include it in the lower number category. H and r block For example, if an asset is described in both (4) and (6), include it in (4). H and r block Agreement. H and r block   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. H and r block This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. H and r block Reporting requirement. H and r block   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. H and r block Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. H and r block The buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. H and r block Sale of Partnership Interest A partner who sells a partnership interest at a gain may be able to report the sale on the installment method. H and r block The sale of a partnership interest is treated as the sale of a single capital asset. H and r block The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary income. H and r block (The term “unrealized receivables” includes depreciation recapture income, discussed earlier. H and r block ) The gain allocated to the unrealized receivables and the inventory cannot be reported under the installment method. H and r block The gain allocated to the other assets can be reported under the installment method. H and r block For more information on the treatment of unrealized receivables and inventory, see Publication 541. H and r block Example — Sale of a Business On June 4, 2013, you sold the machine shop you had operated since 2005. H and r block You received a $100,000 down payment and the buyer's note for $120,000. H and r block The note payments are $15,000 each, plus 10% interest, due every July 1 and January 1, beginning in 2014. H and r block The total selling price is $220,000. H and r block Your selling expenses are $11,000. H and r block The selling expenses are divided among all the assets sold, including inventory. H and r block Your selling expense for each asset is 5% of the asset's selling price ($11,000 selling expense ÷ $220,000 total selling price). H and r block The FMV, adjusted basis, and depreciation claimed on each asset sold are as follows:     Depre- ciation Adj. H and r block Asset FMV Claimed Basis Inventory $ 10,000 -0- $ 8,000 Land 42,000 -0- 15,000 Building 48,000 $9,000 36,000 Machine A 71,000 27,200 63,800 Machine B 24,000 12,960 22,040 Truck 6,500 18,624 5,376   $201,500 $67,784 $150,216         Under the residual method, you allocate the selling price to each of the assets based on their FMV ($201,500). H and r block The remaining $18,500 ($220,000 - $201,500) is allocated to your section 197 intangible, goodwill. H and r block The assets included in the sale, their selling prices based on their FMVs, the selling expense allocated to each asset, the adjusted basis, and the gain for each asset are shown in the following chart. H and r block   Sale  Price Sale   Exp. H and r block Adj. H and r block   Basis Gain Inventory $ 10,000 $ 500 $ 8,000 $ 1,500 Land 42,000 2,100 15,000 24,900 Building 48,000 2,400 36,000 9,600 Mch. H and r block A 71,000 3,550 63,800 3,650 Mch. H and r block B 24,000 1,200 22,040 760 Truck 6,500 325 5,376 799 Goodwill 18,500 925 -0- 17,575   $220,000 $11,000 $150,216 $58,784 The building was acquired in 2005, the year the business began, and it is section 1250 property. H and r block There is no depreciation recapture income because the building was depreciated using the straight line method. H and r block All gain on the truck, machine A, and machine B is depreciation recapture income since it is the lesser of the depreciation claimed or the gain on the sale. H and r block Figure depreciation recapture in Part III of Form 4797. H and r block The total depreciation recapture income reported in Part II of Form 4797 is $5,209. H and r block This consists of $3,650 on machine A, $799 on the truck, and $760 on machine B (the gain on each item because it was less than the depreciation claimed). H and r block These gains are reported in full in the year of sale and are not included in the installment sale computation. H and r block Of the $220,000 total selling price, the $10,000 for inventory assets cannot be reported using the installment method. H and r block The selling prices of the truck and machines are also removed from the total selling price because gain on these items is reported in full in the year of sale. H and r block The selling price equals the contract price for the installment sale ($108,500). H and r block The assets included in the installment sale, their selling price, and their installment sale bases are shown in the following chart. H and r block   Selling  Price Install- ment  Sale  Basis Gross  Profit Land $ 42,000 $17,100 $24,900 Building 48,000 38,400 9,600 Goodwill 18,500 925 17,575 Total $108,500 $56,425 $52,075         The gross profit percentage (gross profit ÷ contract price) for the installment sale is 48% ($52,075 ÷ $108,500). H and r block The gross profit percentage for each asset is figured as follows: Percentage Land— $24,900 ÷ $108,500 22. H and r block 95 Building— $9,600 ÷ $108,500 8. H and r block 85 Goodwill— $17,575 ÷ $108,500 16. H and r block 20 Total 48. H and r block 00 The sale includes assets sold on the installment method and assets for which the gain is reported in full in the year of sale, so payments must be allocated between the installment part of the sale and the part reported in the year of sale. H and r block The selling price for the installment sale is $108,500. H and r block This is 49. H and r block 3% of the total selling price of $220,000 ($108,500 ÷ $220,000). H and r block The selling price of assets not reported on the installment method is $111,500. H and r block This is 50. H and r block 7% ($111,500 ÷ $220,000) of the total selling price. H and r block Multiply principal payments by 49. H and r block 3% to determine the part of the payment for the installment sale. H and r block The balance, 50. H and r block 7%, is for the part reported in the year of the sale. H and r block The gain on the sale of the inventory, machines, and truck is reported in full in the year of sale. H and r block When you receive principal payments in later years, no part of the payment for the sale of these assets is included in gross income. H and r block Only the part for the installment sale (49. H and r block 3%) is used in the installment sale computation. H and r block The only payment received in 2013 is the down payment of $100,000. H and r block The part of the payment for the installment sale is $49,300 ($100,000 × 49. H and r block 3%). H and r block This amount is used in the installment sale computation. H and r block Installment income for 2013. H and r block   Your installment income for each asset is the gross profit percentage for that asset times $49,300, the installment income received in 2013. H and r block Income Land—22. H and r block 95% of $49,300 $11,314 Building—8. H and r block 85% of $49,300 4,363 Goodwill—16. H and r block 2% of $49,300 7,987 Total installment income for 2013 $23,664 Installment income after 2013. H and r block   You figure installment income for years after 2013 by applying the same gross profit percentages to 49. H and r block 3% of the total payments you receive on the buyer's note during the year. H and r block Unstated Interest and Original Issue Discount (OID) An installment sale contract may provide that each deferred payment on the sale will include interest or that there will be an interest payment in addition to the principal payment. H and r block Interest provided in the contract is called stated interest. H and r block If an installment sale contract does not provide for adequate stated interest, part of the stated principal amount of the contract may be recharacterized as interest. H and r block If section 483 applies to the contract, this interest is called unstated interest. H and r block If section 1274 applies to the contract, this interest is called original issue discount (OID). H and r block An installment sale contract does not provide for adequate stated interest if the stated interest rate is lower than the test rate (defined later). H and r block Treatment of unstated interest and OID. H and r block   Generally, if a buyer gives a debt in consideration for personal use property, the unstated interest rules do not apply. H and r block As a result, the buyer cannot deduct the unstated interest. H and r block The seller must report the unstated interest as income. H and r block   Personal-use property is any property in which substantially all of its use by the buyer is not in connection with a trade or business or an investment activity. H and r block   If the debt is subject to the section 483 rules and is also subject to the below-market loan rules, such as a gift loan, compensation-related loan, or corporation-shareholder loan, then both parties are subject to the below-market loan rules rather than the unstated interest rules. H and r block Rules for the seller. H and r block   If either section 1274 or section 483 applies to the installment sale contract, you must treat part of the installment sale price as interest, even though interest is not called for in the sales agreement. H and r block If either section applies, you must reduce the stated selling price of the property and increase your interest income by this unstated interest. H and r block   Include the unstated interest in income based on your regular method of accounting. H and r block Include OID in income over the term of the contract. H and r block   The OID includible in income each year is based on the constant yield method described in section 1272. H and r block (In some cases, the OID on an installment sale contract also may include all or part of the stated interest, especially if the stated interest is not paid at least annually. H and r block )   If you do not use the installment method to report the sale, report the entire gain under your method of accounting in the year of sale. H and r block Reduce the selling price by any stated principal treated as interest to determine the gain. H and r block   Report unstated interest or OID on your tax return, in addition to stated interest. H and r block Rules for the buyer. H and r block   Any part of the stated selling price of an installment sale contract treated by the buyer as interest reduces the buyer's basis in the property and increases the buyer's interest expense. H and r block These rules do not apply to personal-use property (for example, property not used in a trade or business). H and r block Adequate stated interest. H and r block   An installment sale contract generally provides for adequate stated interest if the contract's stated principal amount is at least equal to the sum of the present values of all principal and interest payments called for under the contract. H and r block The present value of a payment is determined based on the test rate of interest, defined next. H and r block (If section 483 applies to the contract, payments due within six months after the sale are taken into account at face value. H and r block ) In general, an installment sale contract provides for adequate stated interest if the stated interest rate (based on an appropriate compounding period) is at least equal to the test rate of interest. H and r block Test rate of interest. H and r block   The test rate of interest for a contract is the 3-month rate. H and r block The 3-month rate is the lower of the following applicable federal rates (AFRs). H and r block The lowest AFR (based on the appropriate compounding period) in effect during the 3-month period ending with the first month in which there is a binding written contract that substantially provides the terms under which the sale or exchange is ultimately completed. H and r block The lowest AFR (based on the appropriate compounding period) in effect during the 3-month period ending with the month in which the sale or exchange occurs. H and r block Applicable federal rate (AFR). H and r block   The AFR depends on the month the binding
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The H And R Block

H and r block 18. H and r block   Pensión para el Cónyuge Divorciado Table of Contents IntroductionCónyuge o ex cónyuge. H and r block Documento (instrumento) de divorcio o separación judicial. H and r block Useful Items - You may want to see: Reglas GeneralesPagos hipotecarios. H and r block Impuestos y seguro. H and r block Otros pagos a terceros. H and r block Documentos Firmados Después de 1984Pagos a terceros. H and r block Excepción. H and r block Pagos sustitutivos. H and r block Específicamente designado como pensión para hijos menores. H and r block Contingencia relacionada con su hijo. H and r block Pago claramente asociado con una contingencia. H and r block Cómo Deducir la Pensión para el Cónyuge Divorciado que Pagó Cómo Declarar la Pensión para el Cónyuge Divorciado Recibida Regla de Recuperación Introduction Este capítulo trata de las reglas correspondientes si paga o recibe pensión para el cónyuge divorciado. H and r block Abarca los siguientes temas: Qué pagos se consideran pensión para el cónyuge divorciado. H and r block Qué pagos no se consideran pensión para el cónyuge divorciado, como la pensión para la manutención de hijos. H and r block Cómo deducir la pensión para el cónyuge divorciado que pagó. H and r block Cómo declarar la pensión para el cónyuge divorciado que recibió por concepto de ingresos. H and r block Si debe o no recuperar los beneficios tributarios de la pensión para el cónyuge divorciado. H and r block “Recuperar” significa volver a añadir a sus ingresos toda, o parte de, una deducción que haya tomado en un año anterior. H and r block La “pensión para el cónyuge divorciado” es un pago hecho a, o para, un cónyuge o ex cónyuge conforme a un documento (instrumento) de divorcio o separación judicial. H and r block No incluye pagos voluntarios que no sean hechos conforme a un documento de divorcio o separación. H and r block La pensión para el cónyuge divorciado es deducible por el pagador y tiene que ser incluida en los ingresos del cónyuge o ex cónyuge. H and r block Aunque en general este capítulo está dirigido al pagador de la pensión para el cónyuge divorciado, el cónyuge beneficiario puede usar la información para determinar si una cantidad recibida se considera pago de pensión para el cónyuge divorciado. H and r block Para considerarse pensión para el cónyuge divorciado, un pago tiene que cumplir ciertos requisitos. H and r block Requisitos distintos generalmente corresponden a pagos hechos conforme a documentos firmados después de 1984 y a pagos hechos conforme a documentos firmados antes de 1985. H and r block Este capítulo trata de las reglas relativas a pagos hechos conforme a documentos firmados después de 1984. H and r block Si usted necesita consultar las reglas para pagos hechos conforme a documentos firmados antes de 1985, obtenga y guarde una copia de la versión del año 2004 de la Publicación 504, Divorced or Separated Individuals (Personas divorciadas o separadas), en inglés. H and r block Ése fue el último año en que la información sobre documentos firmados antes de 1985 se incluyó en la Publicación 504. H and r block Use la Tabla 18-1 de este capítulo como guía para determinar si ciertos pagos se consideran pensión para el cónyuge divorciado. H and r block Definiciones. H and r block   Las siguientes son definiciones aplicables a lo largo de este capítulo. H and r block Cónyuge o ex cónyuge. H and r block   Salvo que se indique lo contrario, el término “cónyuge” incluye a un ex cónyuge. H and r block Documento (instrumento) de divorcio o separación judicial. H and r block   El término “documento de divorcio o separación judicial” significa: Un decreto u orden de divorcio o de manutención por separación judicial o un documento (instrumento) por escrito relacionado con ese decreto u orden; Un acuerdo de separación por escrito o Un decreto o cualquier tipo de orden judicial, que le exige a un cónyuge que haga pagos para la manutención del otro cónyuge. H and r block Esto abarca un decreto temporal, un decreto interlocutorio (no final) y un decreto de pensión para el cónyuge divorciado pendente lite (en espera de que se tomen acciones con respecto al decreto o acuerdo final). H and r block Useful Items - You may want to see: Publicación 504 Divorced or Separated Individuals (Personas divorciadas o separadas), en inglés. H and r block Reglas Generales Las siguientes reglas corresponden a la pensión para el cónyuge divorciado independientemente de cuándo se firmó el documento de divorcio o separación judicial. H and r block Pagos que no son pensión para el cónyuge divorciado. H and r block   No todos los pagos hechos conforme a un documento de divorcio o separación judicial son pensión para el cónyuge divorciado. H and r block La pensión para el cónyuge divorciado no abarca: Pensión para hijos menores; Acuerdos de división (distribución) de bienes que no sean en efectivo; Pagos que le corresponden a su cónyuge como parte de los ingresos de la comunidad de bienes conyugales, según se explica bajo Community Property (Bienes gananciales), en la Publicación 504, en inglés; Pagos hechos para el mantenimiento de los bienes del pagador o Uso de los bienes del pagador. H and r block Pagos a terceros. H and r block   Los pagos en efectivo, cheques o giros hechos a un tercero en nombre de su cónyuge según las condiciones del documento de divorcio o separación judicial pueden ser pagos de pensión para el cónyuge divorciado, si por lo demás reúnen los requisitos. H and r block Estos abarcan pagos hechos para cubrir los gastos médicos de su cónyuge, costos de vivienda (alquiler, servicios públicos, etc. H and r block ), impuestos, matrícula escolar, etcétera. H and r block A estos pagos se les trata como si hubiesen sido recibidos por su cónyuge y luego pagados al tercero. H and r block Primas de un seguro de vida. H and r block   La pensión para el cónyuge divorciado incluye las primas que tiene que pagar conforme a su documento de divorcio o separación judicial por su seguro de vida hasta la medida o el punto en que su cónyuge sea el dueño de la póliza. H and r block Pagos por una vivienda comprada conjuntamente. H and r block   Si su documento de divorcio o separación judicial estipula que tiene que pagar los gastos de una vivienda que es propiedad de usted y su cónyuge, algunos de sus pagos pueden ser considerados pensión para el cónyuge divorciado. H and r block Pagos hipotecarios. H and r block   Si tiene que pagar todos los pagos hipotecarios (capital e intereses) sobre una vivienda de propiedad conjunta y por lo demás estos pagos reúnen los requisitos para considerarse pensión para el cónyuge divorciado, puede deducir la mitad del total de los pagos como pensión para el cónyuge divorciado. H and r block Si detalla sus deducciones y la vivienda reúne los requisitos, puede declarar la mitad de los intereses al calcular sus intereses deducibles. H and r block Su cónyuge tiene que declarar la mitad de los pagos como pensión para el cónyuge divorciado recibida. H and r block Si su cónyuge detalla sus deducciones y la vivienda reúne los requisitos, él o ella puede declarar la mitad de los intereses sobre la hipoteca al calcular sus intereses deducibles. H and r block Impuestos y seguro. H and r block   Si tiene que pagar todos los impuestos sobre bienes raíces o seguro de una vivienda que es tenencia común (tenancy in common), puede deducir la mitad de dichos pagos como pensión para el cónyuge divorciado. H and r block Su cónyuge tiene que declarar la mitad de estos pagos como pensión para el cónyuge divorciado recibida. H and r block Si usted y su cónyuge detallan sus deducciones, cada uno puede reclamar la mitad de los impuestos sobre bienes raíces y ninguna parte del seguro de la vivienda. H and r block    Si es dueño de una vivienda de tenencia en su totalidad (tenancy by the entirety) o tenencia conjunta (joint tenancy), ninguno de sus pagos de impuestos o pagos de seguro se considera pensión para el cónyuge divorciado. H and r block Sin embargo, si detalla sus deducciones, puede reclamar todos los impuestos sobre bienes raíces y ninguna parte del seguro de vivienda. H and r block Otros pagos a terceros. H and r block   Si hizo otros pagos a terceros, vea la Publicación 504, en inglés, para ver si alguna parte de los pagos reúne los requisitos como pensión para el cónyuge divorciado. H and r block Documentos Firmados Después de 1984 Las reglas siguientes de la pensión para el cónyuge divorciado corresponden a pagos hechos conforme a un documento de divorcio o separación judicial firmado después de 1984. H and r block Excepción para documentos firmados antes de 1985. H and r block   Existen dos situaciones en las que las reglas para documentos firmados después de 1984 corresponden a documentos firmados antes de 1985: Un documento de divorcio o separación judicial firmado antes de 1985 y modificado después de 1984 para especificar que las reglas para documentos firmados después de 1984 se aplicarán. H and r block Un documento temporal de divorcio o separación judicial firmado antes de 1985 e incorporado dentro de, o adoptado por, un decreto final firmado después de 1984 que: Cambie la cantidad o el período del pago o Añada o suprima cualquier contingencia o condición. H and r block   Para las reglas de los pagos de la pensión para el cónyuge divorciado hechos conforme a documentos anteriores a 1985 que no cumplan estas excepciones, consulte la versión de la Publicación 504 publicada en 2004, en inglés, en www. H and r block irs. H and r block gov/pub504. H and r block Ejemplo 1. H and r block En noviembre de 1984, usted y su ex cónyuge firmaron un acuerdo de separación judicial. H and r block En febrero de 1985, el acuerdo de separación judicial por escrito fue sustituido por un documento de divorcio. H and r block El documento de divorcio no cambió las condiciones relativas a la pensión para el cónyuge divorciado que le paga a su ex cónyuge. H and r block El documento de divorcio se trata como si hubiese sido firmado antes de 1985. H and r block Los pagos de pensión para el cónyuge divorciado hechos conforme a este documento no están sujetos a las reglas de pagos hechos conforme a documentos firmados después de 1984. H and r block Ejemplo 2. H and r block Suponga que los hechos son iguales a los del Ejemplo 1, salvo que el documento de divorcio cambió la cantidad de la pensión para el cónyuge divorciado. H and r block En este ejemplo, el documento de divorcio no se trata como si hubiese sido firmado antes de 1985. H and r block Los pagos de pensión para el cónyuge divorciado están sujetos a las reglas de pagos hechos conforme a documentos firmados después de 1984. H and r block Requisitos de la pensión para el cónyuge divorciado. H and r block   Un pago realizado a, o para, un cónyuge conforme a un documento de divorcio o separación se considera pensión para el cónyuge divorciado si los cónyuges no presentan una declaración conjunta juntos y si todos los siguientes requisitos se cumplen: El pago es en efectivo. H and r block El documento no indica que el pago no es pensión para el cónyuge divorciado. H and r block Cónyuges que han sido separados legalmente conforme a un decreto de divorcio o un decreto de manutención por separación judicial no se consideran miembros de la misma vivienda. H and r block No hay obligación de hacer pago alguno (en efectivo o en bienes) después de la muerte del cónyuge beneficiario. H and r block El pago no se considera pensión para hijos menores. H and r block Cada uno de estos requisitos se trata a continuación. H and r block Requisito de pagos en efectivo. H and r block   Sólo los pagos en efectivo, incluidos cheques y giros, se consideran pensión para el cónyuge divorciado. H and r block Los siguientes ejemplos no se consideran pensión para el cónyuge divorciado: Transferencias de servicios o bienes (incluyendo una escritura de deuda de un tercero o un contrato de anualidad). H and r block La firma de una escritura de deuda por parte del pagador. H and r block Uso de los bienes del pagador. H and r block Pagos a terceros. H and r block   Los pagos en efectivo a terceros conforme a las condiciones de su documento de divorcio o separación judicial pueden considerarse pagos en efectivo hechos a su cónyuge. H and r block Vea Pagos a terceros bajo Reglas Generales, anteriormente. H and r block   Además, los pagos en efectivo a terceros por medio de una solicitud escrita de parte de su cónyuge pudieran ser considerados pensión para el cónyuge divorciado si se cumplen los requisitos siguientes: Los pagos se hacen en lugar de pagos de la pensión para el cónyuge divorciado hechos directamente a su cónyuge. H and r block La solicitud por escrito declara que ambos cónyuges quieren que los pagos se consideren pagos de pensión para el cónyuge divorciado. H and r block Usted recibe la solicitud por escrito de su cónyuge antes de presentar su declaración para el año en que hizo los pagos. H and r block Pagos no designados como pensión para el cónyuge divorciado. H and r block   Usted y su cónyuge pueden designar que los pagos que de otra manera se considerarían pensión para el cónyuge divorciado, en este caso, no se consideren como tal. H and r block Esto se hace incluyendo una disposición en su documento de divorcio o separación judicial que declare que sus pagos de pensión para el cónyuge divorciado no son deducibles y pueden ser excluidos de los ingresos de su cónyuge. H and r block Con este fin, todo instrumento (documento por escrito) firmado tanto por usted como por su cónyuge que haga esta designación y que se refiera a un acuerdo de separación judicial por escrito anterior se considera acuerdo de separación por escrito (y por lo tanto, un documento de divorcio o separación judicial). H and r block Si está sujeto a una orden temporal de manutención, la designación debe ser hecha en la orden original o en una orden temporal de manutención posterior. H and r block   Su cónyuge puede excluir los pagos de los ingresos sólo si él o ella adjunta a la declaración de impuestos una copia del documento que los designa pagos que no son pensión para el cónyuge divorciado. H and r block La copia debe ser adjuntada cada año en el que la designación corresponda. H and r block Los cónyuges no pueden vivir en la misma vivienda. H and r block    Los pagos a su cónyuge mientras ustedes vivan en la misma vivienda no son pensión para el cónyuge divorciado si están legalmente separados conforme a un documento de divorcio o de manutención por separación judicial. H and r block Una residencia que ambos compartieran antiguamente se considera una vivienda, aun si ustedes se separan físicamente en la residencia. H and r block   No se consideran miembros de la misma vivienda si uno de ustedes se va a ir de la vivienda y se va a más tardar un mes después de la fecha del pago. H and r block Excepción. H and r block   Si no está legalmente separado conforme a un documento de divorcio o de manutención por separación judicial, un pago hecho conforme a un acuerdo de separación por escrito, documento de manutención u otra orden judicial puede considerarse pensión para el cónyuge divorciado aun si ustedes son miembros de la misma vivienda cuando se hace el pago. H and r block Tabla 18-1. H and r block Requisitos de la Pensión para el Cónyuge Divorciado (Documentos Firmados Después de 1984) Los pagos SON pensión para el cónyuge divorciado si todas las condiciones siguientes le corresponden: Los pagos NO son pensión para el cónyuge divorciado si cualquiera de las condiciones siguientes le corresponden: Los pagos son requeridos por un documento de divorcio o de separación judicial. H and r block Los pagos no son requeridos por un documento de divorcio o de separación judicial. H and r block El cónyuge que paga y el cónyuge beneficiario del pago no presentan una declaración conjunta juntos. H and r block El cónyuge que paga y el cónyuge beneficiario del pago presentan una declaración conjunta juntos. H and r block Los pagos son en efectivo (incluyendo cheques o giros). H and r block El pago: No es en efectivo, Es un acuerdo de división (distribución) de bienes que no son en efectivo, Le corresponde a su cónyuge como su parte de los ingresos de la comunidad de bienes conyugales o Es para el mantenimiento de los bienes del cónyuge que paga. H and r block El documento no indica que el pago no es pensión para el cónyuge divorciado. H and r block El documento indica que el pago no es pensión para el cónyuge divorciado. H and r block Los cónyuges que están legalmente separados conforme a un decreto de divorcio o de manutención por separación judicial no son miembros de la misma vivienda. H and r block Los cónyuges que están legalmente separados conforme a un decreto de divorcio o de manutención por separación judicial viven en la misma vivienda. H and r block Los pagos no son requeridos después de la muerte del cónyuge beneficiario. H and r block Los pagos son requeridos después de la muerte del cónyuge beneficiario. H and r block El pago no se considera pensión para hijos menores. H and r block El pago se considera pensión para hijos menores. H and r block Estos pagos pueden ser deducidos por el cónyuge que paga y deben ser incluidos en los ingresos del cónyuge beneficiario. H and r block Estos pagos no pueden ser deducidos por el cónyuge que paga ni pueden ser incluidos en los ingresos del cónyuge beneficiario. H and r block Obligación de pagos después de la muerte del cónyuge beneficiario. H and r block   Si tiene que continuar haciendo pagos por algún período después de la muerte de su cónyuge, la parte del pago que continuaría no se considera pensión para el cónyuge divorciado, independientemente de si se haya hecho antes o después de la muerte. H and r block Si la totalidad del pago continúa, ninguno de los pagos hechos antes o después de la muerte se considera pensión para el cónyuge divorciado. H and r block   En el documento de divorcio o de separación judicial no tiene que constar expresamente que los pagos cesan al morir su cónyuge si, por ejemplo, la obligación de continuar con los pagos terminara conforme a la ley estatal. H and r block Ejemplo. H and r block Usted tiene que pagar a su ex cónyuge $10,000 en efectivo anualmente por 10 años. H and r block En su decreto de divorcio consta que los pagos cesarán al morir su ex cónyuge. H and r block También tiene que pagarle $20,000 en efectivo a su ex cónyuge, o al caudal hereditario (patrimonio) de su ex cónyuge, anualmente por 10 años. H and r block La muerte de su cónyuge no causaría el cese de estos pagos conforme a la ley estatal. H and r block Los pagos anuales de $10,000 podrían considerarse pensión para el cónyuge divorciado. H and r block Los pagos anuales de $20,000 que no cesan al morir su ex cónyuge no son pensión para el cónyuge divorciado. H and r block Pagos sustitutivos. H and r block   Si tiene que hacer algún pago en efectivo o en bienes después de la muerte de su cónyuge para sustituir los pagos continuos que de otra manera corresponderían antes de la muerte, los pagos que de otra manera corresponderían no son considerados pensión para el cónyuge divorciado. H and r block Hasta el punto en que sus pagos comiencen, se aceleren o aumenten debido a la muerte de su cónyuge, los pagos que de otra manera corresponderían que usted hizo podrían considerarse pagos que no son pensión para el cónyuge divorciado. H and r block Si los pagos son o no considerados pensión para el cónyuge divorciado depende de todos los hechos y circunstancias. H and r block Ejemplo 1. H and r block Conforme a su decreto de divorcio, tiene que pagarle a su ex cónyuge $30,000 anualmente. H and r block Los pagos cesarán al final de 6 años o al morir su cónyuge, lo que suceda antes. H and r block Su ex cónyuge tiene la custodia de sus hijos menores de edad. H and r block El decreto estipula que si algún hijo aún es menor de edad al morir su cónyuge, tiene que pagar $10,000 anualmente a un fideicomiso hasta que su hijo más joven alcance la mayoría de edad. H and r block Los ingresos de fideicomiso y los bienes entregados en fideicomiso (capital) sólo pueden ser usados para el beneficio de sus hijos. H and r block Estos hechos indican que los pagos que han de hacerse después de la muerte de su ex cónyuge sustituyen $10,000 de los pagos anuales de $30,000. H and r block De cada uno de los pagos anuales de $30,000, $10,000 no se consideran pensión para el cónyuge divorciado. H and r block Ejemplo 2. H and r block Conforme a su decreto de divorcio, usted tiene que pagarle a su ex cónyuge $30,000 anualmente. H and r block Los pagos cesarán al final de 15 años o al morir su ex cónyuge, lo que suceda antes. H and r block El decreto estipula que si su ex cónyuge fallece antes del final del período de 15 años, usted le tiene que pagar a su caudal hereditario (patrimonio) la diferencia entre $450,000 ($30,000 x 15) y el total de la cantidad pagada hasta ese momento. H and r block Por ejemplo, si su cónyuge fallece al final del décimo año, tiene que pagarle al caudal hereditario (patrimonio) $150,000 ($450,000 − $300,000). H and r block Estos hechos indican que el pago de suma global que ha de hacerse después de la muerte de su ex cónyuge sustituye la cantidad completa de los pagos anuales de $30,000. H and r block Ninguno de los pagos anuales se considera pensión para el cónyuge divorciado. H and r block El resultado sería el mismo si el pago que se requiere cuando ocurre la muerte se descontara por un factor de intereses correspondientes para justificar el pago por adelantado. H and r block Pensión para hijos menores. H and r block   Un pago específicamente designado como pensión para hijos menores o tratado específicamente como pensión para hijos menores conforme a su documento de divorcio o separación judicial no se considera pensión para el cónyuge divorciado. H and r block La cantidad o parte designada podría variar con el tiempo. H and r block Los pagos de la pensión para hijos menores no son deducibles por parte del pagador ni están sujetos a impuestos por parte del beneficiario. H and r block Específicamente designado como pensión para hijos menores. H and r block   Un pago se considera específicamente designado como pensión para hijos menores hasta el punto en que el pago sea reducido por una de las siguientes situaciones: En el caso de una contingencia relacionada con su hijo o En un momento que pueda ser claramente asociado con la contingencia. H and r block Un pago puede considerarse específicamente designado pensión para hijos menores aun si otros pagos por separado son específicamente designados como pensión para hijos menores. H and r block Contingencia relacionada con su hijo. H and r block   Una contingencia está relacionada con su hijo si depende de algún suceso relacionado con ese hijo. H and r block No importa si es seguro o probable que el suceso vaya a ocurrir. H and r block Los sucesos relacionados con su hijo incluyen que éste: Obtenga un empleo, Muera, Deje la unidad familiar, Deje la escuela, Se case o Alcance una edad o un nivel de ingresos específico. H and r block Pago claramente asociado con una contingencia. H and r block   Se considera que los pagos se reducirán en un momento que esté claramente asociado con el suceso de una contingencia relacionada con su hijo sólo en las siguientes situaciones: Los pagos han de ser reducidos dentro de un período de no más de 6 meses antes o después de la fecha en que su hijo alcance los 18 o 21 años de edad o la mayoría de edad en su localidad. H and r block Los pagos han de ser reducidos en dos o más ocasiones que ocurran a más tardar un año antes o después de que otro hijo suyo alcance cierta edad entre los 18 y 24 años. H and r block Esta edad tiene que ser la misma para cada hijo pero no tiene que ser en años completos. H and r block En todas las demás situaciones, las reducciones en pagos no se consideran claramente asociadas con el suceso de una contingencia relacionada con su hijo. H and r block   Usted o el IRS puede evitar la presunción hecha en las dos situaciones anteriores. H and r block Esto se hace mostrando que el momento en el que los pagos han de ser reducidos fue determinado independientemente de toda contingencia relacionada con sus hijos. H and r block Por ejemplo, si puede mostrar que el período de pagos de la pensión para el cónyuge divorciado es el que se acostumbra en su jurisdicción local, tal como un período equivalente a la mitad de los años que duró el matrimonio, puede evitar la presunción y tal vez pueda tratar la cantidad que pagó como pensión para el cónyuge divorciado. H and r block Cómo Deducir la Pensión para el Cónyuge Divorciado que Pagó Puede deducir la pensión para el cónyuge divorciado que pagó, independientemente de si detalla sus deducciones en su declaración o no. H and r block Tiene que presentar el Formulario 1040. H and r block No puede usar el Formulario 1040A ni el Formulario 1040EZ. H and r block Anote la cantidad de la pensión para el cónyuge divorciado que pagó en la línea 31a del Formulario 1040. H and r block En el espacio provisto en la línea 31b, anote el número de Seguro Social (SSN, por sus siglas en inglés o su número de identificación de contribuyente individual para extranjeros (ITIN, por sus siglas en inglés)) de su cónyuge. H and r block Si le pagó pensión para el cónyuge divorciado a más de una persona, anote el número de Seguro Social o número de identificación de contribuyente individual para extranjeros de uno de los beneficiarios de pago. H and r block Muestre el número de Seguro Social o número de identificación de contribuyente individual para extranjeros y la cantidad pagada a cada otro beneficiario de pago en una hoja adjunta. H and r block Anote el total de sus pagos en la línea 31a. H and r block Tiene que proveer el SSN o ITIN de su cónyuge. H and r block Si no lo hace, quizás podría que pagar una multa de $50 y su deducción podría ser denegada. H and r block Para más información sobre los SSN o ITIN, consulte Número de Seguro Social , en el capítulo 1. H and r block Cómo Declarar la Pensión para el Cónyuge Divorciado Recibida Declare la pensión para el cónyuge divorciado que usted recibió en la línea 11 del Formulario 1040. H and r block No puede usar el Formulario 1040A ni el Formulario 1040EZ. H and r block Tiene que darle su número de Seguro Social o número de identificación de contribuyente individual para extranjeros a la persona que pagó la pensión para el cónyuge divorciado. H and r block Si no lo hace, podría tener que pagar una multa de $50. H and r block Regla de Recuperación Si sus pagos de la pensión para el cónyuge divorciado disminuyen o cesan durante los primeros 3 años naturales, podría estar sujeto a la regla de recuperación. H and r block Si está sujeto a esta regla, tiene que incluir en sus ingresos del tercer año parte de los pagos de la pensión para el cónyuge divorciado que había deducido anteriormente. H and r block Su cónyuge puede deducir en el tercer año parte de los pagos de la pensión para el cónyuge divorciado que él o ella anteriormente había incluido en los ingresos. H and r block El período de los 3 años comienza con el primer año natural en el cual usted haga un pago que se considere pensión para el cónyuge divorciado conforme a un documento de divorcio o de separación judicial o conforme a un acuerdo de separación por escrito. H and r block No incluya ningún período en que los pagos se hayan hecho conforme a una orden de manutención temporal. H and r block El segundo y tercer año son los 2 años naturales siguientes, independientemente de si se hacen o no pagos durante esos años. H and r block Las causas de una reducción o cese de pagos de la pensión para el cónyuge divorciado que puedan requerir una recuperación incluyen: Un cambio en su documento de divorcio o separación, No hacer pagos oportunamente, Reducción en su capacidad de proveer manutención o Reducción en las necesidades de su cónyuge. H and r block Cuándo aplicar la regla de recuperación. H and r block   Usted está sujeto a la regla de recuperación el tercer año si la pensión para el cónyuge divorciado que paga el tercer año disminuye por más de $15,000 en comparación con la cantidad que pagó en el segundo año o la pensión para el cónyuge divorciado que paga en el segundo y tercer año disminuye considerablemente de la cantidad de la pensión para el cónyuge divorciado que pagó en el primer año. H and r block   Cuando calcule una disminución en la pensión para el cónyuge divorciado, no incluya las cantidades de los pagos siguientes: Pagos hechos conforme a una orden de manutención temporal. H and r block Pagos requeridos durante un período de por lo menos 3 años naturales que varían porque son una parte fija de sus ingresos provenientes de un negocio o bienes, o de la remuneración de empleo o empleo por cuenta propia. H and r block Pagos que disminuyen debido a la muerte de cualquiera de los cónyuges o porque el cónyuge beneficiario de pago se vuelve a casar antes de finalizar el tercer año. H and r block Cómo calcular la recuperación. H and r block   Use la Worksheet 1 (Hoja de Trabajo 1) de la Publicación 504, en inglés, para calcular la pensión para el cónyuge divorciado recuperada. H and r block Cómo incluir la recuperación en los ingresos. H and r block   Si tiene que incluir una cantidad recuperada en sus ingresos, anótela en la línea 11 (Formulario 1040), “Alimony received” (Pensión para el cónyuge divorciado recibida). H and r block Tache la palabra “received” (recibida) y anote, en inglés, la palabra “recapture” (recuperación). H and r block En la línea de puntos junto a la cantidad, escriba el apellido y número de Seguro Social o número de identificación de contribuyente individual para extranjeros de su cónyuge. H and r block Cómo deducir la recuperación. H and r block   Si puede deducir una cantidad recuperada, anótela en la línea 31a (Formulario 1040), “Alimony paid” (Pensión para el cónyuge divorciado pagada). H and r block Tache la palabra “paid” (pagada) y anote, en inglés, la palabra “recapture” (recuperación). H and r block En el espacio provisto, anote el número de Seguro Social o número de identificación de contribuyente individual para extranjeros de su cónyuge. H and r block Prev  Up  Next   Home   More Online Publications