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What the John recognized gain on the repossession

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Question - John sold a painting in February 2020 for $40,000. He received $10,000 in February and was to receive $15,000 in 2021 and 2022, plus interest. He purchased the painting in 2009 for $15,000, and its basis at time of sale was $15,000. The buyer defaulted on the obligation on January 1, 2021, and John repossessed the painting. He incurred no costs to repossess the painting, and its fair market value at repossession date was $39,000. What the John's recognized gain on the repossession?

a. $6,250

b. $11,250

c. $25,000

d. $27,750

e. $39,000

Reference no: EM132895962

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