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It appears to be the sale of Section 1245 property. The fact that is was used in a farming operation is of no importance. If the selling price of each piece of equipment does not exceed its original purchase price, the sale is not eligible for an installment sale. If the selling price of a piece of equipment happens to exceed its original purchase price, the gain over the original purchase price is eligible for installment sale treatment. It is likely that the gain reported will consist solely of depreciation recapture and is reported in the year of sale without regard to the amount of proceeds received. If there are instances where the selling price exceeds the original purchase cost, it will require Forms 4797 and 6252, if the installment sale is elected for the portion greater than the original purchase cost. If the sale generates depreciation recapture only, the sale is reported on Form 4797. From IRS Publication 544 If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. This applies even if no payments are received in that year. If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. If you dispose of more than one asset in a single transaction, you must figure the gain on each asset separately so that it may be properly reported. To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Report any depreciation re- capture income in the year of sale before using the installment method for any remaining gain. For a detailed discussion of installment sale see Pub. 537. See Gail's comment about the interest on the sale.

The first exception to the penalty listed in Sec 72(t)(2)(A(i) says "made on or after the date on which the employee attains age 59½." Note that there's no mention of "by year end."

Take a look at Whitehurst v Commissioner for a winning case from 2003. Professional Bowler. This is a TC Summary Opinion and cannot be cited, but it lays out pretty well what the TP needs to provided to get a win on these cases. Tom Modesto, CA

That can be brutal if the property is fully depreciated. By the way, welcome to the board Dustan!

I suspect that Abe may not be in our business and should hire a professional. Also, not in CA.

It has been at $5m plus since 2010.

If your client wants to report ALL his profit in the first year, he does not have to report it as an installment sale. Haven't had that happen. Read what Gail told you about interest.

It is the sum of the monthly contributions (1/12 for each eligible month) but as long as the taxpayer is age 55 by the end of the year, then the person will be allowed the full catch up if the taxpayer is in a HDHP for each of 12 months, even for the months before he or she actually turned 55. In other words, for 2020 someone with single coverage and 55 or over by year end, the allowed monthly contribution is $379.16 (1/12 of ($3,550 + 1000)). For 2020 with family coverage and over 55 by year end, the monthly amount is $675 (1/12 of ($7,100 + $1,000)) for each month of eligibility. In both of your examples the TP is eligible for all 12 months, has family HDHP, and is 55 by year, so the contribution allowed will be the same = $8,100.

For those who had not heard: EA Benita Greer-Myers passed away from cancer. She was not on this forum, but was very active in several other newsgroups and tax forums online. She worked for the IRS for many years and was later in private practice, and knew her stuff cold. On top of that, she was a terrific person. More details when available.