Verlin sells a commercial building and receives $50,000 in cash and a note for $60,000 at 10 percent interest. Verlin's adjusted basis in the building on the date of sale is $45,000 and he collects only the $50,000 down payment in the year of the sale. a.
Verlin sells a commercial building and receives $50,000 in cash and a note for $60,000 at 10 percent interest. Verlin's adjusted basis in the building on the date of sale is $45,000 and he collects only the $50,000 down payment in the year of the sale.
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a. |
If Verlin elects to recognize the total gain on the property in the year of sale, calculate the taxable gain.
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b. |
Assuming Verlin uses the installment sale method, calculate the taxable gain he must report for the year of the sale.
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