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f=\Real Estate
sshzzsdEiitenM. Day realtor
REPORTING
INSTALLMENT
INCOME
If you soil a piece of property and the money will be paid to you in, say, three equal installments, how should you report the gain on your tax return?
You can either report your gains each year you receive them, or you can report the entire gain on your tax return for the year in which the sale was made. Often you can save taxes by delaying your income with an installment sale.
On your tax form, the return of your original investment is untaxed, your profit will probably be taxed at capital gains rates, and any interest from the installment sale is counted as ordinary income.
However, if you claimed accelerated depreciation deductions, they will be partially “recaptured,” meaning you must now report some of those deductions as ordinary income. According to the new rules, these recaptured deductions must be reported as of the year of the sale and not in installments. Be careful: You might have a big tax bill, and not get all your money for two more years.
If there is anything we can do to help you in the field of real.estate, please phone or drop in at EILEEN M. DAY, Realtor, The Clopton House, Washington, VA 22747. Phone: 6753400. We’re here to help.
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