In 2018, Patricia purchases a rental property as an investment at a cost of $60,000. From 2018through 2021, she takes $7,000 in depreciation on the property. In 2021, Patricia sells the rental property for $80,000, payable $20,000 per year for 4 years with interest on the unpaid balance at 10%.
a. How much income or loss must Patricia recognize in 2021?
b. Assume that in addition to the sale of the rental property, Patricia sells other capital assets that result in a loss of $28,000. What would you recommend that Patricia do regarding the gain on the sale of the rental property?