Pedro, Not a Dealer, Sold Real Property That He Owned

question 70

Multiple Choice

Pedro, not a dealer, sold real property that he owned with an adjusted basis of $120,000 and encumbered by a mortgage for $56,000 to Pat in 2010.The terms of the sale required Pat to pay $28,000 cash, assume the $56,000 mortgage, and give Pedro eleven notes for $12,000 each (plus interest at the Federal rate) .The first note was payable two years from the date of sale and each succeeding note became due at two-year intervals.Pedro did not "elect out" of the installment method for reporting the transaction.If Pat pays the 2012 note as promised, what is the recognized gain to Pedro in 2012 (exclusive of interest) ?

• A)$12,000.
• B)$7,200.
• C)$4,800.
• D)$0.
• E)None of the above.

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Definitions:

Environmental Influences

External factors such as climate, pollution, and urban design that affect an individual's health, behaviors, and quality of life.

Hereditary Influences

Genetic factors passed down from parents to offspring that affect various characteristics and traits.

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A cognitive bias characterized by an individual's belief that they are more capable or knowledgeable than they actually are.

Communication "Don't"

Guidelines or practices to avoid in effective communication, usually aimed at preventing misunderstandings or offense.