In 2018, Father sold land to Son for $50,000 cash and an installment note for $150,000 due in 2022. Father's basis was $100,000. In 2019, after paying $8,000 interest but nothing on the principal, Son sold the land for $300,000 cash. What gain, if any, must Father recognize in 2019?

Question

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Father's basis in the installment note is $100,000. He received $8,000 interest in 2019, which is not taxable. When Son sold the land for $300,000, Father recognized a gain of $100,000 ($300,000 - $200,000).

In 2018, Father Sold Land to Son for $50,000 Cash