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 is the result if Randy elected out of the installment method for this sale?
Homework Answers
Randy has a total gain of $11,500 [($6,000 + $7,000 + $7,000) - $8,500 basis] on the sale of the land.
If he elects out of the installment sale method, Randy must recognize the entire $11,500 of gain in year 1
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PLEASE HELP In year 1, Aldo sold investment land with a $61,000 tax basis for $95,000....
PLEASE HELP
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PLEASE HELP
In year 1, Aldo sold investment land with a $61,000 tax basis for $95,000. Payment consisted of $15,000 cash down and the purchaser's note for $80,000. The note is being paid in 10 annual installments of $8,000, beginning in year 2. a. Compute Aldo's recognized gain under the installment sale method in years 1 and 2. b. In year 4, Aldo pledged the note as partial collateral for a $75,000 bank loan. The unpaid principal at date of...
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...
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