Russell Corporation sold a parcel of land valued at $425,000. Its basis in the land was...
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Russell Corporation sold a parcel of land valued at $425,000. Its basis in the land was $359,125. For the land, Russell received $61,500 in cash in year 0 and a note providing that Russell will receive $179,000 in year 1 and $184,500 in year 2 from the buyer (plus reasonable interest on the note). |
What is Russell’s recognized gain in year 0, year 1, and year 2?
Homework Answers
| sale price | 425,000.00 | |
| basis | (359,125.00) | |
| profit | 65,875.00 | |
| profit % | 16% | |
| year 0 | 61,500*16% = | 9,840.00 |
| year 1 | 179,000*16%= | 28,640.00 |
| year 2 | 185,500*16%= | 29,520.00 |
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