In 2018,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 2019,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 2019.

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The gain recognized in 2019 is calculated by finding the gross profit percentage and applying it to the principal payment received. The gross profit is $301,000 ($775,000 - $474,000), and the gross profit percentage is 38.84% ($301,000 / $775,000). Applying this percentage to the $67,500 principal payment results in a recognized gain of $26,216.