Question

On December 30, 2018, Whitney sold a piece of property for $168,000. Her basis in the property was $75,600, and she incurred $1,680 in selling expenses. The buyer paid $8,400 down with the balance payable in $15,960 installments over the next ten years. In addition, the buyer assumed a $25,200 mortgage on the property. Round any division to two decimal places, and use in subsequent computations. If require, round your final answer to the nearest dollar. 168,000 , the total gain on the sale is s and the Under the installment sales method, the total contract price is $ amount of gain reported in 2018 is $ Feedback Check My Won The tax law provides special accounting methods for certain installment sales and long-term contracts. These special methods were enacted, in part, to ensure that the tax will be due when the taxpayer is best able to pay the tax.
please help

Answer 1

Answer -

Step - (1) - Calculation of Sale Price -

= Down Payment + Mortgage on Property Assumed by Buyer + Installment Payable

= $8400 + $25200 + ($15960 * 10 years)

= $193200.

.

Step - (2) - Calculation of  Total Contract Price -

= Sale Price - Seller Liability Assumed by Buyer

= $193200 - $25200

= $168000.

.

Step - (3) - Calculation of Total Gain on the Sale -

= Sale Price - Selling Expenses - Adjusted Basis

= $193200 - $1680 - $75600

= $115920.

.

Step - (4) - Calculation of Amount of Gain reported in 2018 -

= (Total Gain on the Sale / Total Contract Price) * Payments Received During Tax Year

= ($115920 / $168000) * $8400

= $5796.