In 2016,Father sold land to Son for $50,000 cash and an installment note for $150,000 due in 2020.Father's basis was $100,000.In 2017,after paying $8,000 interest but nothing on the principal,Son sold the land for $300,000 cash.What gain,if any,must Father recognize in 2017?

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Father's gain is $100,000 ($200,000 sale price - $100,000 basis). Since the installment note is due in 2020, Father has not yet recognized any gain on the installment sale. However, when Son sells the land in 2017, Father must recognize the remaining gain of $75,000 ($100,000 - $25,000 already recognized).

In 2016,Father Sold Land to Son for $50,000 Cash and an Installment