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Homework answers / question archive / M sold investment real estate to B in 2020 for $100,000

M sold investment real estate to B in 2020 for $100,000

Economics

M sold investment real estate to B in 2020 for $100,000. M purchased the property 5 years ago for $60,000. The terms of the sale indicated that B was to pay $20,000 to M in 2020, $50,000 in 2021, and the remaining balance of $30,000 in 2022. M elected to use the installment method to report the gain. Assuming the payments are made as agree upon, how much gain should M report for each year?

1?2020

2?2021

3?2022

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Money paid by M 5 years ago-$60000

Money at which the land is being sold to B-$100000

Gain on the sale of land-Value of land sale-value on which the land was purchased

Gain=$100000-$60000

Gain=$40000

so if we dvide $40000 by 5

we will get $8000 which we will divide in the years of installments

YEAR INSTALLMENT+GAINS TOTAL INSTALLMENT
2020 $12000+$8000

$20000
2021 $34000+$16000

$50000
2022 $14000+$16000

$30000

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