! installment method, any depreciation

CAUTION recapture under section 1245 or 1250

is generally taxable as ordinary income in the year of sale. See Depreciation recapture , later. This applies even if no payments are received in that year.

Related parties. If you sell depreciable property to a related person and the sale is an installment sale, you may not be able to report the sale using the installment method. If you sell property to a related person and the related person disposes of the property before you receive all payments with respect to the sale, you may have to treat the amount realized by the related person as received by you when the related person disposes of the property. The definition of related parties differs based on which of these applies. For more information, see Rela- ted Person under Sale to a Related Person in Pub. 537.