Sarah sold land on November 8, 2012 for $400,000. She acquired the land on October 5, 2007 for $100,000. She received $80,000 down and $320,000 was due September 20, 2013. Sarah was unable to collect the remaining $320,000 and repossessed the land on November 15, 2013 when the land was worth $410,000, incurring $2,000 fees in the process. What is Sarah's recognized gain on the repossession?

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John's long-term capital gain on sale on November 8, 2011 is $70,000 ($100,000 - $30,000). the gross proﬁt percentage is 70% ($70,000/$100,000). He recognizes a $28,000 long-term capital gain on sale (70% ×
$40,000). He recognizes $21,000 long-term capital gain in 2012 (70% × $30,000). His basis in the installment obligation in 2013 is $9,000 ($30,000 remaining balance - $21,000 amount of income reported if remaining balance is paid in full). His gain on sale of the installment obligation is $11,000 ($20,000 - $9,000).

Sarah Sold Land on November 8, 2012 for $400,000