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:

Individualistic Culture

A societal framework that emphasizes personal freedom, individual goals, and the value of personal achievements over group objectives.

Individualistic Cultural Outlook

A perspective prevalent in cultures that value personal independence and self-expression over collective goals and conformity.

Personal Attributes

The qualitative or characteristic features of an individual, including traits, behaviors, and personal qualities.

The Self

A reference to an individual's consciousness of their own identity and personal character.