TPC Inc sold investment land. Gain to be recognized in 2008
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In 2007, TPC Inc. sold investment land with a $474,000 book and tax basis for $775,000. The purchaser paid $100,000 in cash and gave TPC a note for the $675,000 balance of the price. In 2008, TPC received a $105,500 payment on the note ($67,500 principal + $38,000 interest). Assuming that TPC is using the installment sale method,
compute its gain recognized in 2008.
A. $26,216
B. $40,976
C. $67,500
D. None of the above
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The solution lays out all the calculations needed to arrive at the answer to the problem.
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For tax reporting, the Form 6252 is used to calculate the amount of taxable gain to be reported.
Selling price is 775,000
Basis is 474,000
Gain is ...
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