Pelosi Corporation sold a parcel of land valued at $300,000. Its basis in the land was $250,000. For the land, Pelosi received $150,000 in cash in the current year and a note providing Pelosi with $150,000 in the subsequent year. What is Pelosi's recognized gain in the current and subsequent year, respectively?

Question

Quizplus · Accepted Answer

Pelosi's total gain on the sale is $50,000 ($300,000 - $250,000). Since they received half of the payment in the current year, they recognize half of the gain, $25,000, in the current year and the remaining $25,000 in the subsequent year.

Pelosi Corporation Sold a Parcel of Land Valued at $300,000