MH, Inc. sold a business asset with a $39,400 adjusted tax basis for $130,000 in 2008. The purchaser paid $50,000 cash and gave MH a note for the $80,000 balance of the price. MH is using the installment sale method to recognize its gain on sale. In 2011, MH sold the balance of the note to a financial institution for the note's $55,000 face value (MH had already received a total of $25,000 of principal payments on the note). Compute MH's recognized gain on sale of the installment note in 2011. A. $0. B. $38,332. C. $52,268. D. $55,000. E. None of the above
MH, Inc. sold a business asset with a $39,400 adjusted tax basis for $130,000 in 2008. The purchaser paid $50,000 cash and gave MH a note for the $80,000 balance of the price. MH is using the installment sale method to recognize its gain on sale. In 2011, MH sold the balance of the note to a financial institution for the note's $55,000 face value (MH had already received a total of $25,000 of principal payments on the note). Compute MH's recognized gain on sale of the installment note in 2011. A. $0. B. $38,332. C. $52,268. D. $55,000. E. None of the above
Chapter11: Property Dispositions
Section: Chapter Questions
Problem 84TA
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Transcribed Image Text:MH, Inc. sold a business asset with a $39,400 adjusted tax basis for
$130,000 in 2008. The purchaser paid $50,000 cash and gave MH a
note for the $80,000 balance of the price. MH is using the installment
sale method to recognize its gain on sale. In 2011, MH sold the
balance of the note to a financial institution for the note's $55,000
face value (MH had already received a total of $25,000 of principal
payments on the note). Compute MH's recognized gain on sale of the
installment note in 2011.
A. $0.
B. $38,332.
C. $52,268.
D. $55,000.
E. None of the above
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