Question

Zeke's Zipline Adventures sold 6 acres of land used in the business. The sales price was $12,000 and the adjusted basis of the land was $9,000. Zeke received $4,000 at the time of sale and will receive the remaining $8,000 early next year. How much gain will Zeke recognize in the current year

Answer 1

$1,000

Step-by-step explanation:

Zeke's zipline sold 6 acres of land

The sales price of the land was $12,000

The adjusted basis of the land was $9,000

Zeke received an amount of $4,000 at the time of sale

The remaining $8,000 will be received next year

Therefore, the amount of gain that will be recognised by Zeke in the Current year can be calculated as follows

Sales price-adjusted basis/sales price

$12,000-$9,000/$12,000

= $3,000/$12,000

= 0.25

Amount received at the time of sale × 0.25

= $4,000×0.25

= $1,000

Hence Zeke will recognise a gain of $1,000 in the Current year.