Charlotte sold her unincorporated business for $600,000 in 2014.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

The $120,000 gain on the equipment is all § 1245 depreciation recapture and,therefore,is ineligible for the installment method.The gain on the land of $150,000 and the $180,000 gain from the sale of the goodwill are eligible for the installment method.Therefore,the amount of gain eligible for installment sales treatment is $330,000 ($150,000 + $180,000).

Charlotte Sold Her Unincorporated Business for $600,000 in 2014