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The Installment Method-Income Taxation

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On September 16, 2009, Donald Dunn sold for $80,000 property with an adjusted basis of $20,000.

The buyer paid $20,000 down with the remaining $60,000 to be paid in four equal annual installments of $15,000 beginning in September 2010 with interest at 12%. How much income does Donald report in 2009 and the following four year? Ignore interest.

Sold property for 80,000
adjusted basis of 20,000

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Donald's gross profit is $60,000 (i.e., $80,000-$20,000). His gross profit ...

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