A Default

[Tax Sleuth]

My client sold vacant land through a purchase-money mortgage in 2018, and an amortization schedule shows principal and interest amounts were supposed to be paid from buyer to seller (my client) for 24 months. Two payments were made in 2018. Then, the buyer died and no additional payments have been made in 2019.

According to the mortgage document, the mortgage can be continued by the heirs of the buyer. No one from her family has contacted my client, and my client has not filed an action to foreclose on the mortgage to take the property back. I am planning to finish his 2018 federal income tax return in the near future by completing Form 6252 and putting the interest income on Schedule B. Given the above circumstances, am I handling this situation correctly?

[TAXNJ]

You can decide if you are “handling this situation correctly?” reviewing The Tax Book starting at 4-10.

Is this a continuation of your other post today?

[Tax Sleuth]

I honestly don't understand how The Tax Book 4-10 relates to the question I have asked. I am trying to learn if my above interpretation of this case is correct. If possible, can someone please answer my above question in a more direct fashion?

[kathyc2]

Given the above circumstances, am I handling this situation correctly?

Hard to say, but I have doubts. This is the third time you have asked questions regarding this transaction, with different and confusing information.

If the installment contract does not come to completion, a worksheet from Pub 537 will need to be calculated to determine clients new basis in following year. The worksheet can be confusing and you may be over your head with it.

It may be in everyone's best interest if you have a colleague in your area to look over your work before you give return to client.

[TAXNJ]

I honestly don't understand how The Tax Book 4-10 relates to the question I have asked. I am trying to learn if my above interpretation of this case is correct. If possible, can someone please answer my above question in a more direct fashion?

See The Tax Book 6-15 Interest Income (From an Installment Sale)

as reply poster kathyc2 suggestion of Pub 537 should also address your questions in a more direct fashion.

Think that “interpretation of this case is correct” is your responsibility to decide and not a reply posters’ responsibility.