Todd, a CPA, Sold Land for $300,000 Cash on the Date

Todd, a CPA, sold land for $300,000 cash on the date of sale plus a note for $500,000 due in one year. The interest rate on the note was equal to the Federal rate. The fair market value of the note was $400,000. Todd's basis in the land was $80,000.

A) If Todd uses the cash basis to report the income from his practice, he cannot use the installment method to report the gain on the sale of the land.
B) If Todd uses the accrual basis to report the income from his practice, he cannot use the installment method to report the gain from the sale of the land.
C) If Todd uses the installment method to report the gain, the contract price is $800,000.
D) If Todd does not use the installment method, his gain in the year of sale is $620,000 ($700,000 - $80,000) .
E) None of the above.