1. Amy owes the bank $450,000, and is currently having some cash flow problems. Therefore, in full satisfaction of debt, she gives the bank land with a FMV of $425,000 (Basis of $260,000). What is the amount and character of income that Amy must recognize as a result of this transaction?

2. Right House Networks allows its customers to pay by the year in advance ($800), or two years in advance ($1500). In September 2019, the company collected the following amounts for future services:

Oct. 2019- Sept 2021 (Two-year contracts) $150,000

Oct. 2019- Sept 2020 (One-year contracts) $ 64,000

Calculate the amount of the above that would be included in Right House Networks taxable income in 2019, 2020, and 2021, respectively assuming:

a) Right House recognizes income on the cash basis.

b) Right House recognizes income on the accrual basis