3805E: Installment Sale Income (2024)
California · FTB · Used for tax years 2024
California Form 3805E calculates and reports income from a sale or other disposition of property using the installment method. It includes gross profit, contract price, payments received, and related-party installment sale income. Attach a separate form for each sale or dispositi
Who files this form
Use Form FTB 3805E to report a sale or other disposition of property on the installment method. Use a separate form for each sale or disposition.
Complete Part I only for the year of sale. Complete Part II for the year of sale and any year you receive a payment or have certain debts you must treat as payments on installment obligations.
For property sold to a related party after December 31, 1980, the form directs you to complete Part III for the year of sale and the next two years, unless you received the final payment during the tax year.
What you'll need
Have the information requested on the form ready:
- Your name as shown on your tax return and your taxpayer identification number.
- A description of the property and the dates you acquired and sold it.
- The selling price, debts the buyer assumed, your cost or other basis, California depreciation amounts, and selling expenses.
- Any income recapture from Schedule D-1, Parts III and IV, and any excluded gain for your main home using California amounts.
- Payments received during the year and in prior years, excluding stated or unstated interest.
- For a related-party sale, the related party's name, address, taxpayer identification number, and information about any resale or other disposition.
If you check Part III, box 29e, attach an explanation supporting that tax avoidance was not a principal purpose of either disposition.
How to file
Attach Form FTB 3805E to your California tax return. Use a separate form for each sale or other disposition reported on the installment method.
Enter the result from line 26, and line 37 if applicable, on Schedule D (540, 540NR, 541, 565, 568, or 100S) or Schedule D-1, as directed by the form.
Common mistakes
- Do not include stated or unstated interest in the selling price on line 5 or payments on lines 21 and 23.
- On line 6, do not include new mortgages the buyer obtained from a bank or another source.
- Use California amounts for depreciation on line 9 and excluded main-home gain on line 15.
- If line 14 is zero or less, stop. Do not complete the rest of the form.
- Complete Part I only for the year of sale. On line 20, enter zero for years after the sale.
- Line 24 cannot be zero or less.
- Do not complete Part III if you received the final installment payment during the taxable year.
- On line 29, check only the box that applies. Attach an explanation if you check box 29e.
Questions people ask
Can I report several installment sales on one form?
No. Use a separate Form FTB 3805E for each sale or other disposition of property on the installment method.
Do I complete Part I every year?
No. Complete Part I only for the year of sale. Part II applies to the year of sale and any year you receive a payment or have certain debts you must treat as payments on installment obligations.
Do I include interest in payments received?
No. Lines 21 and 23 direct you to exclude stated or unstated interest from payments received during the year and in prior years.
What if the property was my main home?
On line 15, enter your excluded gain using California amounts. If the property was not your main home, enter zero.
Do I complete Part III if I received the final installment payment this year?
No. The form says not to complete Part III if you received the final installment payment during the taxable year.