Oslego Company,a Calendar Year Taxpayer,sold Land with a $400,000 Tax

question 37

Essay

Oslego Company,a calendar year taxpayer,sold land with a $400,000 tax basis for $635,000 in March 2017.The purchaser paid $50,000 cash at closing and gave Oslego an interest-bearing note for the $585,000 remaining price.In September,Oslego received $50,450 cash from the purchaser consisting of a $29,250 principal payment and a $21,200 interest payment.Assuming that Oslego does not elect out of the installment sale method,compute the company's 2017 gain recognized on sale and its tax basis in the note receivable on December 31.

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Definitions:

Bath Sponges

Natural or synthetic sponges used for cleansing the body; natural ones are harvested from the ocean and belong to a simple, multicellular organism group.

Silica

A hard, unreactive, colorless compound that occurs as the mineral quartz and as a principal constituent of sandstone and other rocks.

Calcium Carbonate

A chemical compound used as a dietary supplement or antacid; it's also the main component of limestone.

Spongin

A fibrous protein that makes up the skeleton of many sponges.