7. TP entered into an installment sale for the sale of his apartment building. The building (and land) had an adjusted basis of $500,000. TP sold the building for $1,500,000. TP received $100,000 in the year of sale, and agreed to accept $1,400,000 in equal annual payments of $200,000 over the next 7 years plus annual interest rate of 5% on the unpaid principal balance. The income recognition in year following the year of sale would be closest to: a. $200,000 in capital gain and $75,000 in interest income. b. 0 capital gain and $75,000 in interest income. c. $33,333 in capital gain and $75,000 in interest income d. $133,333 in capital gain and $70,000 in interest income.

7. TP entered into an installment sale for the sale of his apartment building. The building (and land) had an adjusted basis of $500,000. TP sold the building for $1,500,000. TP received $100,000 in the year of sale, and agreed to accept $1,400,000 in equal annual payments of $200,000 over the next 7 years plus annual interest rate of 5% on the unpaid principal balance. The income recognition in year following the year of sale would be closest to: a. $200,000 in capital gatin and $75,000 in interest income. b. 0 capital gain and $75,000 in interest income. c. $33,333 in capital gain and $75,000 in interest income d. $133,333 in capital gain and $70,000 in interest income