Pedro Sells Land That He Held as an Investment with a Basis

question 104

Short Answer

Pedro sells land that he held as an investment with a basis of $40,000 for $50,000. The terms of the sale require the buyer to pay Pedro $10,000 at the closing of the sale and $20,000 per year for the next 2 years with interest at 7% on the unpaid balance. What is the proper amount of gain to be reported from the sale during each year Pedro receives payments?

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Definitions:

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