Todd, a CPA, Sold Land for $300,000 Cash on the Date

question 2

Multiple Choice

Todd, a CPA, sold land for $300,000 cash on the date of sale plus a note for $500,000 due in one year. The interest rate on the note was equal to the Federal rate. The fair market value of the note was $400,000. Todd's basis in the land was $80,000.

• A) If Todd uses the cash basis to report the income from his practice, he cannot use the installment method to report the gain on the sale of the land.
• B) If Todd uses the accrual basis to report the income from his practice, he cannot use the installment method to report the gain from the sale of the land.
• C) If Todd uses the installment method to report the gain, the contract price is $800,000.
• D) If Todd does not use the installment method, his gain in the year of sale is $620,000 ($700,000 - $80,000).
• E) None of the above.

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Definitions:

Institutionalizing

The process of embedding practices, norms, and values within an organization to make them stable and enduring.

Influencing

The act or process of affecting the behavior, attitudes, or decision-making of others through persuasion or authority.

Powerlessness

A state of feeling unable to control or influence events or outcomes, often leading to frustration or resignation.

Job Enrichment

The process of making a job more rewarding, engaging, and satisfying by adding more meaningful tasks and duties.