Wendy sold property on the installment basis in 2009 for more than her basis in the property.Wendy was to receive installment payments at the end of each year for the next five years.In 2010,before she collected on the installment obligation for that year,Wendy gave to her daughter (Wilma)the installment obligation so that she could collect the four remaining installments.
A)Wilma must recognize the gain from all the amounts collected on the installment obligation in 2010 and subsequent years.
B)Wendy must recognize the gain each year when Wilma collects on the installment obligation.
C)Wilma must recognize the remaining installment sale gain in 2010.
D)Wendy must recognize the remaining installment sale gain in 2010 and Wilma will not recognize gain from collecting on the installment obligation.
E)None of the above.

Question

Quizplus · Accepted Answer

Since Wendy gave the installment obligation to Wilma before collecting any payments in 2010, she must recognize the remaining gain on the sale in that year. Wilma will then collect the remaining payments and will not recognize any gain since she acquired the obligation after the sale took place.

Wendy Sold Property on the Installment Basis in 2009 for More