TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000 remaining price. In August, TPW received a $55,950 payment from the purchaser consisting of a $33,750 principal payment and a $22,200 interest payment. * I only need Requirement C (box 2) to be solved. Required: c. Compute gain recognized in the year of sale if TPW uses the installment sale method of accounting. Compute TPW’s tax basis in the note at the end of the year.
TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000 remaining price. In August, TPW received a $55,950 payment from the purchaser consisting of a $33,750 principal payment and a $22,200 interest payment. * I only need Requirement C (box 2) to be solved. Required: c. Compute gain recognized in the year of sale if TPW uses the installment sale method of accounting. Compute TPW’s tax basis in the note at the end of the year.
Chapter11: Invest Or Losses
Section: Chapter Questions
Problem 64P
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TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000 remaining price. In August, TPW received a $55,950 payment from the purchaser consisting of a $33,750 principal payment and a $22,200 interest payment.
* I only need Requirement C (box 2) to be solved.
Required:
c. Compute gain recognized in the year of sale if TPW uses the installment sale method of accounting. Compute TPW’s tax basis in the note at the end of the year.
Transcribed Image Text:TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at
closing and gave TPW an interest-bearing note for the $675,000 remaining price. In August, TPW received a $55,950 payment from
the purchaser consisting of a $33,750 principal payment and a $22,200 interest payment.
Required:
a. Compute gain realized on the sale.
b. Compute gain recognized in the year of sale if TPW elects not to use the installment sale method of accounting. Compute TPW's tax
basis in the note at the end of the year.
c. Compute gain recognized in the year of sale if TPW uses the installment sale method of accounting. Compute TPW's tax basis in the
note at the end of the year.
X Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Compute gain recognized in the year of sale if TPW uses the installment sale method of accounting. Compute TPW's tax basis
in the note at the end of the year. (Round gross profit percentage to 2 decimal places, and other intermediate calculations to
the nearest whole dollar amount.)
Amount
Gain recognized
$
TPW's tax basis in note
$
31,179
409,281 X
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