Charlotte sold her unincorporated business for $600,000 in 2015.The sales contract allocated $120,000 to equipment,$300,000 to land,and $180,000 to goodwill.Charlotte had a $0 basis in the goodwill,the land cost $150,000,and the equipment originally cost $250,000 but it was fully depreciated.What is the amount of the gain eligible for installment sales treatment?

Question

Quizplus · Accepted Answer

To determine the gain eligible for installment sales treatment, we need to calculate the gain on each of the assets:

- Equipment: Since it was fully depreciated, there is no gain or loss on the sale, so the $120,000 allocated to equipment does not contribute to the eligible gain.
- Land: The land had a basis of $150,000 and was sold for $300,000, resulting in a gain of $150,000.
- Goodwill: There was no basis in the goodwill, so the entire $180,000 allocated to goodwill is eligible gain.

Therefore, the total eligible gain is $150,000 + $180,000 = $330,000. Answer choice B is correct.

Charlotte Sold Her Unincorporated Business for $600,000 in 2015