During the year, F Corporation sold a parcel of land that it purchased several years ago for $10,000.F received $20,000 in cash and an $80,000 note payable in eight annual installments beginning next year.With respect to this sale, F must increase its E&P by $90,000 .

Question

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When a corporation sells property, it must recognize any gain or loss on the sale for tax purposes. In this case, the sale resulted in a $90,000 gain ($20,000 cash plus $80,000 note payable - $10,000 basis in the land). Since E&P is primarily based on taxable income, the gain on the sale will increase F Corporation's E&P by $90,000.

During the Year, F Corporation Sold a Parcel of Land