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<<Thank you for your reply and the information. I may have done something wrong entering the data as I have been examining the forms that Ttax has used for this sale and it appears that the sale is reported on both Form 6252 and Form 4797.>>

That's the way it MUST work on an installment sale for rental property. It must flow first through Form 4797 (for any depreciation recapture computations...and to determine how much gain is "capital" and how much is from depreciation recapture) and then to the 6252 for the GP ratio and computation of gain. It's a complicated transaction.

<< As best I can determine from the IRS instructions only Form 6252 is needed.>>

Nope...not for a rental property. This would be true if it were a capital asset (such as a vacant lot or something). But with a rental property, you'll have to deal with Form 4797 AND 6252. It's possible that TTax program is not sophsticated enough to do the allocations correctly...which is why they might want you to split up the land and the structure...they may end up dealing with TWO Forms 6252. I really don't know.

But again...what I DO know is that this can be a VERY COMPLEX transaction. And I don't know if TTax has the "stones" to get it correct. Nor do I know if you have the knowledge of the law down to such an extent to complete the input forms correctly. So this is a potential train wreck waiting to happen.

<< This type of transaction is new to me and I would appreciate if you could tell me if this is correct.>>

My thoughts are above. You may be over your head on this one. At a MINIMUM...you'll want to read more about the sale of rental property and depreciation recapture in the appropriate IRS Publication.

TMF Taxes
Roy
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