Pelosi Corporation sold a parcel of land valued at $300,000.Its basis in the land was $250,000.For the land,Pelosi received $150,000 in cash in the current year and a note providing Pelosi with $150,000 in the subsequent year.What is Pelosi's recognized gain in the current and subsequent year,respectively?

Question

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Pelosi's total gain is $50,000 ($300,000 - $250,000). In the current year, Pelosi receives $150,000 in cash, which is half of the total sale price. Therefore, half of the gain, $25,000, is recognized in the current year. The remaining $25,000 gain is recognized in the subsequent year when the note is paid.

Pelosi Corporation Sold a Parcel of Land Valued at $300,000