Contents Important Change for 1999   ............... 1 Introduction  ........................................ 1 What Is an Installment Sale?  ............ 2 General Rules  ..................................... 2 Figuring Installment Income  ........... 2 Reporting Installment Income  ......... 3 Other Rules  ......................................... 3 Electing Out of Installment Method 3 Payments Received  ........................ 4 Escrow Account  .............................. 5 Depreciation Recapture Income  ..... 5 Sale to Related Person  .................. 5 Like-Kind Exchange  ........................ 6 Contingent Payment Sale  ............... 6 Single Sale of Several Assets  ........ 6 Sale of a Business .......................... 7 Unstated Interest and Original Issue Discount ................................... 8 Disposition of Installment Obligation 9 Repossession  ................................. 10 Reporting an Installment Sale   .......... 11 How To Get More Information   .......... 16 Index  .................................................... 17 Important Change for 1999 Photographs   of   missing   children. The Internal Revenue Service is a proud partner with the National Center for Missing and Ex- ploited   Children.   Photographs   of   missing children selected by the Center may appear in this publication on pages that would other- wise  be  blank. You  can  help  bring  these children home by looking at the photographs and calling  1–800–THE–LOST (1–800–843– 5678) if you recognize a child. Introduction An installment sale is a sale of property where you receive at least one payment after the close of the tax year of the sale. If you dis- pose of property in an installment sale, you report part of your gain or profit when you receive each installment payment. You can- not use the installment method to report a loss. This   publication   discusses   the   general rules that apply to all installment sales. It also discusses more complex rules that apply only when certain conditions exist or certain types of property are sold. There are two examples of reporting installment sales on Form 6252 at the end of the publication. CAUTION ! At the time this publication was being prepared   for   print,   Congress   was considering    legislation    that    would generally prohibit accrual method taxpayers from   using   the   installment   method   of   ac- counting for dispositions of property. For more information about this and other important tax changes, see Publication 553,  Highlights of 1999 Tax Changes. Department of the Treasury Internal Revenue Service Publication 537 Cat. No. 15067V Installment Sales For use in preparing 1999  Returns