1099-s & land contract

[tax24]

I have a client that lived in their home from 2009-2013 (only 4 years they owned the home), sold it to an individual on a land contract. They received a 1099-S for $78000 for the sale of the home but have not actually received that $78000 because they sold it on a land contract. The adjusted basis for the home is $75,000. The land contract was for $78000 they received a down payment of $10000 so $68,000 is financed with the land contract for the next 20 years at 5%. I included the self-mortgaged interest on the Sch B properly. But my question is can exclude the the $3000 ($78000-$75000) gain from the sale of their home because it was their primary residence for 4 years? Also, is there anything else that I need to be aware of with a Land Contract? Don't want to miss anything.

Thank you for any advise!!
Heather

[Burke]

In this case, you exclude the entire sales price if they qualify for Sect 121, sale of personal residence. Which it appears they do from the information in your post. You can show this on Sche D. The only thing they will report is the interest on Sche B, this year and each year in the future. Do not complete Form 6252 as there is no reportable gain.

[tax24]

Thank you

This is what I was thinking also, I appreciate all the help!!