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TAXMAN

INSTALLMENT SALE

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TP age 77 sold rental property to son at FMV financing 90% to provide income to him and spouse next couple years. It seems pub 537 indicates I can't report on installment sale because it is depreciable property in the new owners hands. It was not set up that way to avoid tax just to provide future income. I think I do not have a choice in this one except to report in full. What do you think? Report as full sale or not? Thanks

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Generally speaking, the sale of depreciable property to a related party cannot be reported on the installment method.

"Exception:  The installment method is allowed if the seller can show that tax avoidance is not the principal purpose of the sale."

This was the rule prior to the TCJA, don't know if it still applies for 2018 ?

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