Charlotte sold her unincorporated business for $600,000 in 2019.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 amount of gain eligible for installment sales treatment, we need to subtract the adjusted basis (original cost minus accumulated depreciation) from the sales price for each asset:

- Equipment: $120,000 - $250,000 = ($130,000) loss
- Land: $300,000 - $150,000 = $150,000 gain
- Goodwill: $180,000 - $0 = $180,000 gain

The total gain is $150,000 + $180,000 = $330,000, which is the amount eligible for installment sales treatment. Therefore, the correct answer is B.

Charlotte Sold Her Unincorporated Business for $600,000 in 2019