IRS Publication 537

AAA

DEFINITION of 'IRS Publication 537'

A document published by the Internal Revenue Service (IRS) that details the rules covering how gains from an installment sale are to be reported. Taxpayers who sell property using the installment method receive at least one payment in a later tax period, and may report part of the gain from the sale when the payment is received. When reporting gains using Form 6252 (Installment Sale Income), the taxpayer indicates the income from the gain on the sale as well as any interest received during the year in which payment is given.

INVESTOPEDIA EXPLAINS 'IRS Publication 537'

Property can include real estate but does not include inventory; people who regularly sell personal property ("dealers") are not permitted to use the installment method. Taxpayers do not have to use the installment method when selling property, and can choose to report all of the gain in the year of the actual sale. The installment method cannot be used if a loss was taken on the sale. If a loss was taken on an installment sale it can only be deducted in the year that the property was sold.

RELATED TERMS
  1. Installment Debt

    A loan that is repaid by the borrower in regular installments. ...
  2. Gain

    An increase in the value of an asset or property. A gain arises ...
  3. Interest

    1. The charge for the privilege of borrowing money, typically ...
  4. Installment Sale

    A method of sale that allows for partial deferral of any capital ...
  5. Tax Year

    The period of time which is covered by a particular tax return. ...
  6. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
RELATED FAQS
  1. How is cost basis calculated on an inherited asset?

    Typically, the cost basis on inherited assets is the fair market value as of the time of the decedent's death or actual transfer ... Read Full Answer >>
  2. How is market value determined in the real estate market?

    Anyone who has ever tried to purchase or sell a home has probably heard a lot about the property's fair market value, or ... Read Full Answer >>
  3. How does the role of Medicare/Medicaid affect the drugs sector in the U.S.?

    Medicare and Medicaid have enormous influence on the pharmaceutical, or drugs, sector in the United States. For instance, ... Read Full Answer >>
  4. In what instances does overhead qualify for certain tax allowances?

    Businesses are just as keen as anyone else to keep their tax burdens low by any means possible. Overhead expenses often qualify ... Read Full Answer >>
  5. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>
  6. How can tariffs cause inefficiencies in domestic industries?

    Any government regulation naturally creates inefficiencies in a pure supply and demand marketplace. When it comes to the ... Read Full Answer >>
Related Articles
  1. Home & Auto

    5 Mistakes That Make House Flipping A Flop

    If you're just looking to get rich quick, you could end up in the poorhouse.
  2. Taxes

    Avoiding A Big Tax Bill On Real Estate Gains

    Installment sales allow sellers to defer taxes on real estate profits.
  3. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  4. Taxes

    Avoid Capital Gains Tax On Your Home Sale

    If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer.
  5. Investing

    Can Donald Trump Really Win the Presidency?

    Understand why demographic trends and his lack of broad appeal are likely to keep Donald Trump from being a serious contender for the presidency.
  6. Taxes

    Top Tax Tips to Deduct Investment Management Fees

    Investment expenses can be deducted by those who meet three main criteria. Here's what they are and how they work.
  7. Economics

    What Does Infrastructure Mean?

    Examples of infrastructure include mass transit, communication, sewage, water and electric systems, plus roads, bridges and tunnels.
  8. Economics

    What's a Centrally Planned Economy?

    A centrally planned economy is one where the government controls the country’s supply and demand of goods and services.
  9. Professionals

    Can Young Workers Rely on Social Security?

    Young savers have time on their hands to take advantage of many investment strategies, and they should because Social Security alone might not be enough.
  10. Economics

    Sacrifices Necessary to Keep Puerto Rico Afloat

    After years of band aids and significant borrowing to meet its obligations, the time has come for meaningful reform in Puerto Rico.

You May Also Like

Hot Definitions
  1. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  2. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  3. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  4. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  5. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  6. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!