Pedro sells land that he held as an investment with a basis of $40,000 for $50,000.The terms of the sale require the buyer to pay Pedro $10,000 at the closing of the sale and $20,000 per year for the next 2 years with interest at 7% on the unpaid balance.What is the proper amount of gain to be reported from the sale during each year Pedro receives payments?
$ { \text { Current } } \quad { \text { First } } \quad { \text { Second } } $
$ \underline { \text { Year } } \quad \quad \underline{ \text { Year } } \quad\quad \underline{ \text { Year } } $
a. $ { 2,000 } \quad\quad { \$ 4,000 } \quad\quad { \$ 4,000 }$
b. $\$ 10,000 \quad \$ - 0 - \quad \$ - 0 -$
c. \$ $- 0 - \quad \$ 4,000 \quad \quad\$ 6,000$
d. $\$ 3,333 \quad \$ 3,333 \quad\quad \$ 3,334$
e. $\$ - 0 - \quad \$ - 0 - \quad \$ 10,000$

Question

Pedro sells land that he held as an investment with a basis of $40,000 for $50,000.The terms of the sale require the buyer to pay Pedro $10,000 at the closing of the sale and $20,000 per year for the next 2 years with interest at 7% on the unpaid balance.What is the proper amount of gain to be reported from the sale during each year Pedro receives payments?
$  { \text { Current } }   \quad   { \text { First } }   \quad   { \text { Second } }  $
$  \underline { \text { Year } }  \quad \quad    \underline{ \text { Year } }   \quad\quad    \underline{ \text { Year } }  $
a. $  { 2,000 } \quad\quad { \$ 4,000 } \quad\quad  { \$ 4,000 }$
b. $\$ 10,000 \quad \$ - 0 - \quad \$ - 0 -$
c. \$ $- 0 - \quad \$ 4,000 \quad \quad\$ 6,000$
d. $\$ 3,333 \quad \$ 3,333 \quad\quad \$ 3,334$
e. $\$ - 0 - \quad \$ - 0 - \quad \$ 10,000$

Quizplus · Accepted Answer

The Answer of Pedro sells land that he held as an investment with a basis of $40,000 for $50,000.The terms of the sale require the buyer to pay Pedro $10,000 at the closing of the sale and $20,000 per year for the next 2 years with interest at 7% on the unpaid balance.What is the proper amount of gain to be reported from the sale during each year Pedro receives payments?
$  { \text { Current } }   \quad   { \text { First } }   \quad   { \text { Second } }  $
$  \underline { \text { Year } }  \quad \quad    \underline{ \text { Year } }   \quad\quad    \underline{ \text { Year } }  $
a. $  { 2,000 } \quad\quad { \$ 4,000 } \quad\quad  { \$ 4,000 }$
b. $\$ 10,000 \quad \$ - 0 - \quad \$ - 0 -$
c. \$ $- 0 - \quad \$ 4,000 \quad \quad\$ 6,000$
d. $\$ 3,333 \quad \$ 3,333 \quad\quad \$ 3,334$
e. $\$ - 0 - \quad \$ - 0 - \quad \$ 10,000$

Pedro Sells Land That He Held as an Investment with a Basis