Question

Reporting farmland sale on Form 6252

Forum|Forum|6 years ago
February 14, 2020
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2019 has a new requirement for Form 6252, to enter a code on line1 to describe the installment sale property. One of the choices is Code 3 - and I have not idea what section2032A(e)(4)or (5) means? This farmland was sold in 1996 and is reported on form 6252 first, then the gain is reported on form 4797 line 4 as Section 1231 gain, and then it flows through to Schedule D. So on Form 6252 I fell like I should be using code 4 for line 1 (the description for 4 is: All other installment sales not listed) and not Code 3? Is that correct?

Not A Product Question

ColeenD3

U.S. Code § 2032A refers to inherited property. See this link for a more detailed explanation.

2032A. If it was not inherited and meeting all the qualifications listed, then choose between personal use and other sales not listed.

Line 1 Enter a code from the list below and describe the installment sale property.

Code: 1. Sale property is timeshare or residential lot.
2. Sale by an individual of personal use property (within the meaning of section 1275(b)(3)).
3. Sale of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5)).
4. All other installment sales not listed.

G

georgen0w

Choosing type 2 property comes up with this definition:

For purposes of this subsection, the term “personal use property” means any property substantially all of the use of which by the taxpayer is not in connection with a trade or business of the taxpayer or an activity described in section 212. The determination of whether property is described in the preceding sentence shall be made as of the time of issuance of the debt instrument.

Does that include houses that were bought for resale?