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Installment Sale CalculatorGross Profit Percentage and Gain by Year

What do these figures come to once the work is shown?

Selling price, contract price, gross profit percentage, installment income in the year of sale and gain deferred, with recapture and assumed mortgages.

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  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Installment income in the year of sale
$1,000
Plus any recapture income, which is taxed in the year of sale
Gross profit percentage
50.00%
Gross profit
$5,000
Drawn to one scale
Installment income in the year of sale$1,000
Gross profit$5,000
Contract price$10,000
Payments counted in the year of sale$2,000
Depreciation recapture reported in the year of sale$0
Gain still deferred after the year of sale$4,000
All results
MeasureResult
Installment income in the year of sale$1,000
Gross profit percentage50.00%
Gross profit$5,000
Contract price$10,000
Payments counted in the year of sale
Includes any mortgage above installment basis
$2,000
Depreciation recapture reported in the year of sale$0
Gain still deferred after the year of sale$4,000
How this was worked out
Work shownrecomputed as you type
Installment basis = adjusted basis + selling expenses + depreciation recapture
Gross profit = selling price - installment basis
Contract price = selling price - assumed mortgage + any excess of the mortgage over installment basis
Gross profit % = gross profit / contract price
Income each year = payments received x gross profit %

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Installment basis = adjusted basis + selling expenses + depreciation recapture
  • Gross profit = selling price - installment basis
  • Contract price = selling price - assumed mortgage + any excess of the mortgage over installment basis
  • Gross profit % = gross profit / contract price
  • Income each year = payments received x gross profit %

How it works

The installment method of section 453 spreads the gain over the years payments arrive. Each payment, less interest, carries the same gross profit percentage. A mortgage the buyer assumes is not a payment unless it exceeds your installment basis, and the excess is treated as received in the year of sale.

Recapture income is reported in full in the year of sale, so it is added to basis for the computation and shown separately. Interest, imputed interest and related-party second dispositions under section 453(e) are not handled here. Dealer sales and inventory do not qualify.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Why is the gross profit percentage 100 percent in some sales?

When the assumed mortgage equals or exceeds installment basis, the contract price equals the gross profit and the percentage is 100.

Can I elect out?

This tool computes the installment method only and does not model the election out.

Does interest count?

No. Pub. 537 applies the percentage to payments received less interest.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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