Nick Sells Land with a $7,000 Adjusted Basis for $10,000

question 60

Essay

Nick sells land with a $7,000 adjusted basis for $10,000.Nick receives a $2,000 down payment with the balance of $8,000 due the following year.Nick is unable to collect the remaining $8,000 and,after incurring legal fees of $500,he repossesses the land when it has a fair market value of $9,000.
a.What is the amount of gain that Nick must report in the first year?
b.What is the amount of gain that Nick must report in the second year?
c.What is the basis in the repossessed stock?

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Definitions:

Unpaid Massage Therapy Sessions

Refers to instances where massage therapy services have been provided but payment has not been received.

Preserve Relationship

Efforts or actions taken to maintain and protect the quality of a relationship, often in a personal, business, or legal context.

Sexual Misconduct

Behavior of a sexual nature that is not appropriate or legal, typically in a workplace or institutional setting.

Economic Sensitive Material

Information or data that is sensitive due to its potential economic impact, often related to financial markets or trade secrets.