Step 2.

Official source

Reduce the amount figured in Step 1 by any section 1250 ordinary income recapture for the sale. This is the amount from line 26g of your 2025 Form 4797 (or the comparable line of Form 4797 for the year of sale) for the property. The result is your total unrecaptured section 1250 gain that must be allocated to the installment payments received from the sale.

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Step 2.

Official source

Reduce the amount figured in Step 1 by any section 1250 ordinary income recapture for the sale. This is the amount from line 26g of your 2025 Form 4797 (or the comparable line of Form 4797 for the year of sale) for the property. The result is your total unrecaptured section 1250 gain that must be allocated to the installment payments received from the sale.