PRINCIPLES OF TAXATION F/BUS.+INVEST.
22nd Edition
ISBN: 9781259917097
Author: Jones
Publisher: MCG
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Chapter 8, Problem 12AP
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 pledge was $56,000. Determine the tax consequences of this pledge to Aldo.
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Chapter 8 Solutions
PRINCIPLES OF TAXATION F/BUS.+INVEST.
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