Discuss what amount of gain is realized on the sale

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Can someone please help me answer the following questions:

1) Timon decides to sell 5 acres of land for $100,000. The cost basis for the land is $37,500. Timon agrees to sell the property for four equal payments of $25,000 - one now and the other three on January 1 of the next 3 years. What amount of gain is realized on the sale? What amount of gain is recognized in Year 1? What is Timon's basis in the note receivable at the end of Year 2?

2) Caleb sells machinery for $90,000 for two equal payments of $45,000(plus interest). Caleb's original basis was $80,000 and he has claimed$30,000 of depreciation deductions up to the time of sale. Caleb will receive 1 payment now and one next year. What amount of gain is realized on the sale? What amount of gain is recognized in Year 1?

Reference no: EM131781668

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