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Vermont allows taxpayers to elect to pay 6% tax on the total income of the installment sale rather than include each year's income in the regular tax calculation. To make this election, go to the VTInst screen in the Income & Adjustments folder and mark the Elect to Pay 6% Tax box next to the sale.

Current year sales

If you mark the Elect to Pay 6% Tax option, Onvio Tax removes the income from taxable income subject to the Vermont tax rate schedule and taxes the Gross profit for each selected sale at 6%. The application includes this optional tax on the tax reported on Form FIT-161, Page 1, line 6 and displays the text "6% Tax Election Option" on the form, and generates an election statement with the return.

Prior year sales

For prior year installment sales you mark on the VTInst screen, Onvio Tax will deduct the current year installment income from the taxable income used in the tax calculation on Schedule B on page 2. The state would have taxed the total income in a prior year, so the application does not display any tax for the current year income on the federal Form 6252.

Vermont overview (1041)