ZuoTi.Pro
Question

Kyle sold land on the installment basis for $100,000. His basis in the land was $70,000....

Kyle sold land on the installment basis for $100,000. His basis in the land was $70,000. Kyle received a $40,000 down payment and a real estate installment sale contract calling for $60,000 in additional payments in future years. In addition, Kyle paid $6,000 in commissions on the sale. What is the gross profit to be recognized in the current year?

Group of answer choices

$24,000

$12,000

$9,600

$0

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solution

The option 'C, $9600' is correct option.

Explanation:

Sold of land $100,000
Basis of land $(70,000)
Commission $(6000)
Gross profit $24,000
Contract price $100,000
Profit percentage 24% ($24,000/$100,000)
Cash collected $9,600 ($40,000 × 24%)
0 0
Add a comment
Know the answer?
Add Answer to:
Kyle sold land on the installment basis for $100,000. His basis in the land was $70,000....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • On Dec. 31, 2020, Mary sold a piece of investment land for $1M (basis = $100,000)....

    On Dec. 31, 2020, Mary sold a piece of investment land for $1M (basis = $100,000). Mary received $100,000 cash on Dec. 31, 2020 and a $900,000 note. The note calls for three annual installment payments of 300K beginning in 2021 and provides for annual interest payments (at market rate, beginning in 2021). Mary will use the installment sale method to report her taxable gain. In 2021, Mary receives a $300,000 installment payment on the note plus $36,000 interest on...

  • George sold land to an unrelated party in 2018. His basis in the land was $44,000...

    George sold land to an unrelated party in 2018. His basis in the land was $44,000 in the selling price was $132,000-$33,000 payable at closing and $33,000 (+ 10% interest) due January 1, 2019, 2020 and 2021. what would be the tax consequence of the following? treat each part independently, assume that George did not elect out of the installment method and the installment obligations have values equal to their face amounts. Ignore interest in your calculations. Record the gross...

  • On January 2, year 1, Randy sold a parcel of land held as an investment. Randy’s basis in the land was $8,500. The buyer...

    On January 2, year 1, Randy sold a parcel of land held as an investment. Randy’s basis in the land was $8,500. The buyer made a $6,000 down payment on the date of sale and $7,000 payments on January 2 in both year 2 and year 3. In addition, the buyer paid 8 percent interest on the unpaid balance. How much income should Randy have recognized in years 1, 2, and 3, assuming that he used the installment method? What...

  • Hal, a cash basis taxpayer, sold investment land in 2018 for $200,000. He received $40,000 in...

    Hal, a cash basis taxpayer, sold investment land in 2018 for $200,000. He received $40,000 in the year of sale and $160,000 in 2019. The cost of the land was $80,000. Under the installment method, how much gain must the taxpayer report in 2018? a. Hal must recognize $24,000 gain in the year of the sale B. Hal must recognize $36,000 gain in the year of the sale C. Hal must recognize $60,000 gain in the year of the sale...

  • 14-31 Installment Sale. On July 1, 2018, G sold her summer cottage (basis $70,000) for $105,000....

    14-31 Installment Sale. On July 1, 2018, G sold her summer cottage (basis $70,000) for $105,000. The sale contract provided for a payment of $30,000 at the time of sale and payment of the $75,000 balance in three equal installments due in July 2019, 2020, and 2021. Assuming a reasonable interest rate is charged on this deferred pay- ment sale, compute each of the following: a. Gross profit on the sale b. Total contract price Gross profit percentage d. Gain...

  • TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February....

    TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000 remaining price. In August, TPW received a $55,950 payment from the purchaser consisting of a $33,750 principal payment and a $22,200 interest payment. In the first year after the year of sale, TPW received payments totaling $106,900 from the purchaser. The total consisted of $67,500 principal payments and...

  • Carlton holds undeveloped land for investment. His adjusted basis in the land is $200,000, and the...

    Carlton holds undeveloped land for investment. His adjusted basis in the land is $200,000, and the FMV is $325,000. On November 1, 2018, he exchanges this land for land owned by his son, who is 31 years old. The appraised value of his son’s land is $320,000 with a basis of $310,000. 1.Calculate Carlton’s realized and recognized gain or loss from the exchange with his son and on Carlton’s subsequent sale of the land to a real estate agent on...

  • Taylor sold a capital asset on the installment basis for $1 million in total payments and...

    Taylor sold a capital asset on the installment basis for $1 million in total payments and did not charge interest on the deferred payment due in three years. The sale generated a gain that Taylor reported using the installment method. a.         Interest will be imputed, thus increasing the total gross income from the transaction. b.         Interest will be imputed, thus decreasing the total gross income from the transaction. c.         Interest will not be imputed because the contract is for less...

  • On Year 1 ABC Company sell equipment to XYZ Company for $415,000 in an installment sale....

    On Year 1 ABC Company sell equipment to XYZ Company for $415,000 in an installment sale. ABC Company has a basis in the equipment of $250,000. In year 1 ABC company will received three payments totaling $300,000 and in year 2 the final payment totaling $115,000. What is the gross profit on the sale? What is the gross profit percentage? How much taxable income is recognized in year 1? How much taxable income is recognized in year 2? If the...

  • Ten years ago, Dudley contributed land to the Prosperity LLC. His basis in the land was...

    Ten years ago, Dudley contributed land to the Prosperity LLC. His basis in the land was $100,000. The fair market value at the contribution date was $115,000. This year, when the property's value was $200,000, the LLC distributed that property to partner Nicki. At that time, Dudley's basis in his LLC interest was $50,000 and Nicki's basis was $60,000. Assume that the partnership continues in existence and has no hot assets. What gain or loss is recognized as a result...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT