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I would like to talk to Robin D about my tax questions asked on 9/23/17.
Submitted: 8 months ago.Category: Tax
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9/28/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,229
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hey - Lane here, I'll opt out and let Robin answer, but very quickly...

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The installment method IS the DEFAULT METHOD any time that payment for a capital transaction is received over more than one year.

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YOu only elect OUT of installment not in.

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If you reported as IF you had elected out, you certainly can (and should) amend to use the 6252 to report correctly.

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See this from IRS:

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"An installment sale is a sale of property where you'll receive at least one payment after the tax year in which the sale occurs. You're required to report gain on an installment sale under the installment method unless you "elect out" on or before the due date for filing your tax return (including extensions) for the year of the sale"

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Now if you're saying they elected out and want to revoke that, there has been relief. See this:

...

http://www.woodllp.com/Publications/Articles/ma/November2006doover.pdf

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Nope... gonna backpedal a little ... looks like by reporting on Form 8949, Form 4797, or both, you DID elect out.

...

So now we're back to the relief that HAS been provided

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Here's the IRS line on this:

...

from https://www.irs.gov/publications/p537#en_US_2016_publink1000221640

Revoking the election.

Once made, the election can be revoked only with IRS approval. A revocation is retroactive. You will not be allowed to revoke the election if either of the following applies.

  • One of the purposes is to avoid federal income tax.

  • The tax year in which any payment was received has closed.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Automatic 6-month extension.

If you timely file your tax return without making the election, you still can make the election by filing an amended return within 6 months of the due date of your return (excluding extensions). Write "Filed pursuant to section(###) ###-####2" at the top of the amended return and file it where the original return was filed.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

(I'm not checking the box to be rated, so Robin and/or others can chime in here)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 7 months ago

Good to talk to you Ann ... After re-reading Mr Wood's piece (which ends with the following:)

...

"A taxpayer’s mistake often leads to additional taxes, penalties and interest. However, here the IRS granted consent for the revocation of the taxpayer’s election out of the installment method. Put simply, the IRS allowed a “doover,” and that was even after the amended (a.k.a. “do over”) return was already filed. Of course, you can’t plan for this. Relying on the IRS to grant such a consent seems risky. It is probably best to leave “do-overs” to childhood memories."

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And in looking for any TC cases, it appears that amending would be a mistake. Your request the R.O. to consider will be better perceived as a request to correct a mistake.

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Don't know if this might apply, but in T.C. Summary Opinion 2001-137 UNITED STATES TAX COURT DONNA M. BOKMAN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 14105-99S. the court allowed for the default electing out by reporting the entire gain NOT to be made because the return was not timely filed (IRS claimed that the timely filed part of the election was no operative or as important s the fact that the entire gain was reported)

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"Petitioner is making the unusual argument that her return was not timely filed, despite the fact that respondent has apparently treated it as timely in all respects. Respondent argues that petitioner made prior representations that her return was timely filed, and that “Petitioner should not be allowed to choose whether or not her return was mailed timely based up[on] which scenario is to her benefit at that particular moment.” We disagree. Petitioner’s ability to rely on the fact that her return was filed late to escape the unintended election is admittedly fortuitous for her, but cannot be set aside merely for that reason. The regulation quoted above is written under the assumption that the taxpayer desires to show that a return was timely filed. Reading the regulation in light of petitioner’s situation leads - 7 - to some incongruities. Nonetheless, we find that the record in this case shows that section 7502 is inapplicable and that petitioner’s return was not timely filed."

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"Because section 7502 is not applicable, petitioner’s return was untimely filed when the IRS received it on October 21, 1996. Thus, her election out of the installment method was not a valid election under section 453(d), contrary to respondent’s determination. See Bolton v. Commissioner, 92 T.C. 303 (1989)"

...

(again don't know if the return in question here was timely filed, but if not this could be applied)

...

STill looking, ...

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