Jasmine owned rental real estate that she sold to her tenant in an installment s

Question

Jasmine owned rental real estate that she sold to her tenant in an installment sale. Jasmine acquired the property in 2003 for $400,000; took $178,000 of depreciation on it; and sold it for $210,000, receiving $25,000 immediately and the balance (plus interest at a market rate) in equal payments of $18,500 for 10 years.

What is the nature of the recognized gain or loss from this transaction?

A) The nature of this transaction results in a § 1231 ( loss/ gain) of ($?$) .

B) Jasmine (will / will not) use installment method for this transaction, because it is ( only used to postpone realized gains/ only used to postpone realized losses / .used to postpone realized gains and losses) ??

Explanation / Answer

book value (400,000 - 178,000) 222,000

Sales proceeds                      210,000

Loss:                                   & 12,000

It is a Capital loss

No need to use installment method.

Installment method will helps to postponed a Gain

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