3805E: Installment Sale Income (2025)
California · FTB · Used for tax years 2025
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 to your Cali
Who files this form
Use Form 3805E to report a sale or other disposition of property using the installment method. Use a separate form for each sale or disposition and attach it to your California tax return.
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.
What you'll need
Have the information needed for the applicable parts of the form:
- Your name as shown on your tax return and taxpayer identification number.
- A description of the property and the dates you acquired and sold it.
- The selling price and mortgages or other debts the buyer assumed or took the property subject to.
- The property's cost or other basis, California depreciation amounts, and commissions or other selling expenses.
- Income recapture amounts from Schedule D-1, Parts III and IV, if applicable.
- Your excluded gain using California amounts, if the property was your main home.
- Payments received during the current year and prior years, excluding stated or unstated interest.
- For Part III, the related party's name, address, taxpayer identification number, and information about any resale or other disposition.
How to file
Attach Form 3805E to your California tax return. Use a separate form for each installment sale or other disposition.
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 on the form.
The supplied form does not provide a mailing address or e-filing instructions.
Common mistakes
- Do not include stated or unstated interest in the selling price on line 5 or payments on lines 21 and 23.
- Do not include new mortgages the buyer obtained from a bank or other source on line 6.
- Use California amounts for depreciation on line 9 and any main-home gain exclusion on line 15.
- If line 14 is zero or less, stop. Do not complete the rest of the form.
- 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. If you check box e, attach an explanation.
Questions people ask
Can I report multiple sales on one form?
No. Use a separate Form 3805E for each sale or other disposition reported using 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 treated as payments on installment obligations.
When do I complete Part III for a related-party sale?
If the property was 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.
How is the gross profit percentage calculated?
Line 19 directs you to divide gross profit on line 16 by the contract price on line 18 and express the result as a decimal. For years after the sale, the form refers you to the instructions, which were not supplied.