Reference no: EM132517389
Question - Answer the following questions and explain.
Q1. Joe Smith, a cash-basis taxpayer, earned an annual salary of $80,000 at Resolute Corp. in 2018, but he elected to take only $50,000. Resolute, which was financially able to pay Smith's full salary, credited the unpaid balance of $30,000 to Smith's account on the corporate books in 2018, and actually paid this $30,000 to Smith on January 30, 2019. How much of the salary is taxable to Smith in 2018? Explain.
Q2. In the current year, Owens sold land with a basis of $80,000 to Yancey for $100,000. Yancey paid $25,000 down and agreed to pay $15,000 per year, plus interest, for the next five years, beginning in the second year. Under the installment method, what gain should Owens include in gross income for the year of sale?
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What gain should Owens include in gross income
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