Todd,a CPA,sold land for $200,000 plus a note for $400,000.The interest rate on the note was equal to the Federal rate.The fair market value of the note was $360,000.Todd's basis in the land was $75,000.

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According to the installment method, the contract price is calculated as the sum of the cash and the fair market value of the note, which in this case is $200,000 + $360,000 = $560,000. As a result, Todd can use the installment method to report the gain on the sale of the land, and the contract price is $600,000 ($200,000 + $400,000). It is irrelevant whether Todd uses the accrual or cash basis to report the income from his practice, as this does not affect his eligibility to use the installment method. Option D is incorrect because the gain from the sale of the land is treated as an installment sale with the installment method.

Todd,a CPA,sold Land for $200,000 Plus a Note for $400,000