Dolzer Inc.sold a business asset with a $474,000 adjusted book and tax basis for $775,000.The purchaser paid $100,000 in cash and gave Dolzer a note for the $675,000 balance of the price.Dolzer will not receive a payment on the note until next year.Assuming that Dolzer uses the installment sale method,compute Dolzer's book and tax gain in the year of sale.

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The book gain is the difference between the selling price and the adjusted book basis: $775,000 - $474,000 = $301,000. The tax gain is the difference between the selling price and the adjusted tax basis: $775,000 - $474,000 = $301,000. However, since Dolzer will not receive a payment on the note until next year, only a portion of the gain is recognized in the year of sale. The portion of the gain recognized is equal to the cash received divided by the total selling price: $100,000 / $775,000 = 12.9%. Therefore, the book gain recognized in the year of sale is $301,000 x 12.9% = $38,839, and the tax gain recognized in the year of sale is also $38,839.