report of payments

Forum|Forum|3 years ago
March 17, 2023
1 reply
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I bought a heavy equipment machine with the intention of selling it at the end of the project and hopefully break even. Then somebody wanted to buy it from me and made a total of lets say $10,000 in payments but defaulted on the payments and the equipment is still mine.

How do I report the $10,000 payments I received from him?

MAK70

In this situation, you are a lender that repossessed the property. The repossession is treated as a sale from which you realize gain or loss. Figure the gain or loss from a repossession the same way as the gain or loss from a sale.

The gain is the difference between the amount realized and the adjusted basis of the transferred property (amount realized minus adjusted basis). The loss is the difference between the adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized).

Enter as the sale of an investment unless you had reported as an installment sale in a prior year. See Where do I enter a capital gain or loss? - TurboTax Support.