PK Corp. sold a business asset with a $45,000 adjusted tax basis for $150,000 in 2009. The buyer paid $60,000 cash and gave PK a note for the $90,000 balance. PK is using the installment sale method to recognize its gain. In 2012, PK sold the balance of the note to a bank for the note's $65,000 face value (PK had already received $25,000 in principal payments on the note). What is PK's recognized gain on sale of the installment note in 2012? A) $0 B) $45,500 C) $65,000 D) $42,875
PK Corp. sold a business asset with a $45,000 adjusted tax basis for $150,000 in 2009. The buyer paid $60,000 cash and gave PK a note for the $90,000 balance. PK is using the installment sale method to recognize its gain. In 2012, PK sold the balance of the note to a bank for the note's $65,000 face value (PK had already received $25,000 in principal payments on the note). What is PK's recognized gain on sale of the installment note in 2012? A) $0 B) $45,500 C) $65,000 D) $42,875
Chapter11: Property Dispositions
Section: Chapter Questions
Problem 84TA
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Transcribed Image Text:PK Corp. sold a business asset with a $45,000 adjusted tax basis for
$150,000 in 2009. The buyer paid $60,000 cash and gave PK a note for
the $90,000 balance. PK is using the installment sale method to
recognize its gain. In 2012, PK sold the balance of the note to a bank
for the note's $65,000 face value (PK had already received $25,000 in
principal payments on the note). What is PK's recognized gain on sale
of the installment note in 2012?
A) $0
B) $45,500
C) $65,000
D) $42,875
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