Question

A resident of California sells Nevada real estate in an installment sale. In the current year he receives a return of principal of $10,000, taxable gain of $2,000 and interest of $1,000. What is his California taxable income

Answer 1

The California taxable income from the installment sale for the resident includes the taxable gain of $2,000 and the interest income of $1,000, totaling $3,000.

Step-by-step explanation:

The resident of California who sold Nevada real estate in an installment sale has a California taxable income comprised of the return of principal, the taxable gain, and the interest received in the current year. Specifically, the taxable income for California would include the taxable gain of $2,000 and the interest income of $1,000. The return of principal is not taxable. Hence, the total California taxable income would be $3,000 for the current year.

Answer 2

The taxable income is $13000

Step-by-step explanation:

The sell by California resident = $10000

The taxable gains = $2000

Given interest rate = $1000

Since during the year total amount received is the return of principal, gains, and interest rate. Therefore total amount = 10000 + 2000 + 1000 = $13000

Thus, the total amount received during the years is California taxable income.