I:11-50 Deferred Payment Sale. Joe sells land with a $60,000 adjusted basis for $42,000. He incurs selling expenses of $2,000. The land is subject to a $10,000 mortgage. The buyer, who assumes the mortgage, pays $8,000 down and agrees to pay Joe $8,000 per year for three years plus interest. The installment obligations are worth $24,000.

a. How much gain or loss does Joe report in the year of the sale?

b. When does Joe report the interest income from the sale?

c. Does Joe report gain or loss when he collects the installment payments?