On September 2, of This Year, Keshawn Sold Land to Rex

question 988

Multiple Choice

On September 2, of this year, Keshawn sold land to Rex, his nephew, for $400,000. Keshawn's basis in the land was $100,000. Rex agreed to pay his uncle $40,000 this year, and $60,000 each year for the next six years plus interest. One month later, Rex sold the land to Theo, an unrelated party, for $450,000. Based on this information, Keshawn must report

• A) $0. Rex reports gain of $300,000.
• B) gain of $30,000 this year, and gain in each of the following six years of $45,000 plus interest.
• C) gain of $225,000 this year.
• D) gain of $225,000 this year plus interest in following six years.

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