A cash basis taxpayer sold investment land in 2015 for $200,000.He received $40,000 in the year of sale and $160,000 in 2016.The cost of the land was $80,000.Under the installment method,the taxpayer would report a $24,000 gain in 2015.

Question

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Under the installment method, the gain is reported as payments are received. The gross profit percentage is calculated as ($200,000 - $80,000) / $200,000 = 60%. In 2015, the taxpayer received $40,000, so the gain reported is 60% of $40,000, which is $24,000.

A Cash Basis Taxpayer Sold Investment Land in 2015 for $200,000.He