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:

Day-To-Day Life

Refers to the routine activities and experiences that constitute a person's regular existence.

Genetic Changes

Alterations or mutations in an organism's DNA sequence, affecting its characteristics or traits and possibly being passed on to the next generation.

Socially Unacceptable

Socially unacceptable refers to behaviors or actions that are not approved by or are in violation of societal norms and standards.

Biopsychosocial Approach

An integrated approach that considers biological, psychological, and social factors in understanding health, illness, and healthcare delivery.