5. Lou and Ann believe that they got the best price for their house by using a seller-financed mortgage. They have heard from friends that this will also help them with their retirement income goals and will give them certain tax advantages. How should the sale of their main home be reported for tax purposes? a) Report the entire nonexcludable gain in the year of sale and report the interest each year for the next 15 years on Form 6252, Installment Sale Income. b) Calculate their nonexcludable gain and the portion of the gain to be reported each year starting in the year of sale and ending in the year the final payment is received on the 15- year mortgage on Form 6252. The contract price will be $800,000. c) Calculate their nonexcludable gain and the portion of the gain to be reported each year starting in the year of sale and ending in the year the final payment is received under the 15-year mortgage on Form 6252. The contract price will be $720,000 because an $80,000 down payment was received in the year of sale. d) They cannot use the installment method if they want to exclude the gain. Since the exclusion must be taken in the year of sale, any remaining gain must also be reported in the year of sale. Interest received over the life of the seller financed mortgage will be reported each year on Schedule B, Form 1040 (Interest and Ordinary Dividends)