Yes, please continue looking!
Part one and two were filled out in 2007. Part 1 computed the Gross profit (285k). Part 2 computed the Gross profit percentage of .6074.
In subsequent years since no payments (principle) were received 6252 was not attached. The interest received was declared on Schedule B.
The instructions for Part 2 of the 6252 are straightforward. Go line by line to determine what lines should be filled out. Worksheet B does not get attached to your tax return. I am sending the link for Form 6252 which includes line by line instructions.
Please let me know if you require further clarification or information.
I already have the form and instructions. What I am not understanding is where the reduced sales price is recorded. Are you saying it is only the reduced gross profit percentage that is recorded?
Also; if the reduced sales price is not recorded for 2012 (the year the price was reduced) how does it get reported in the final year when the contract is fully paid off?
Go ahead and take your time, will be out for a while.
The main things I need to verify/understand:
1.) The only thing that gets recorded in the year the contract price was adjusted is the Reduced Gross Profit Percentage (on 6252 line 19)??
(please verify this, I want to make sure my taxes are done right)
2.) What about the Reduced Contract/Sales price??? Since the original is recorded on 6252 in the year of sale, how does the revised amount get reported?
If the selling price is reduced at a later date, the gross profit on the sale also will change. You then must refigure the gross profit percentage for the remaining payments. Refigure your gross profit using Worksheet B. You will spread any remaining gain over future installments. You will notice that the first line of Worksheet B is where you put the reduced selling price so you can determine the gross profit percentage for line 19 of the 6252, and also determine the gain to be reported.
If you read through the example you cited in your original question to the end, you will see how everything falls into place.
I hope this makes sense now.
The problem is I don't see where on any forms to fill in the reduced selling price (the one filled in on Worksheet B that doesn't get filed with the returns). The selling price is noted on the original 6252 filed for the year of sale (6252). Going from the Publication 537 and from reading what you say, in the year the contract is changed the reduced selling price is not noted on any tax form (only worksheet B used to compute line 19 of form 6252). If this is the case, there must be somewhere to fill out the reduced sales price in the final year of disposition. Further, if you look at Worksheet A from Publication 537 you will note that this is basically from Part 1 of form 6252. I am not convinced that the calculations shown on Worksheet B likewise are not supposed to go on any tax forms.