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    Taxpayer A sells a parcel of undeveloped real property to B

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    Taxpayer A sells a parcel of undeveloped real property to Taxpayer B for $100,000. A receives a promissory note with a face amount of $100,000 bearing adequate interest. However, due to the solvency of B, the note has a value at the time of receipt of only $60,000. When must Taxpayer A recognize income if A does not use the installment method?

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    Solution Preview

    Taxpayer A sells land for $100,000 and receives a note for $100,000 that is worth $60,000 due to solvency at the current time. The taxpayer recognizes the income under constructive receipt. Constructive receipt takes place when the taxpayer can actually use the ...

    Solution Summary

    Taxpayer A sells a parcel of undeveloped real property to Taxpayer B for $100,000. A receives a promissory note with a face amount of $100,000 bearing adequate interest. However, due to the solvency of B, the note has a value at the time of receipt of only $60,000. When must Taxpayer A recognize income if A does not use the installment method?

    $2.19

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