1

Brian acquired a rental house in 2001 for a cost of $80,000. Straight-line depreciation on the property of $26,000 has been claimed by Brian. In January 2016, he sells the property for $120,000, receiving $20,000 cash on March 1 and the buyer's note for $100,000 at 10 percent interest. The note is payable at $10,000 per year for 10 years, with the first payment to be received 1 year after the date of sale.

Calculate his taxable gain under the installment method for the year of sale of the rental house.

In your computations, round any division to two decimal places

2

During the current year, Daniel James exchanges a truck used in his business for a new truck. Daniel's basis in the truck is $18,000, and the truck is subject to a liability of $8,000, which is assumed by the other party to the exchange. Daniel receives a new truck that is worth $22,000.

Recognized gain-

Basis in the new truck-