Calculation of Gain or Loss, Installment Sales (LO 8.8, 8.10) Steve Drake sells a rental house on lanuary 1, 2022, and receives $100,000 cash and a note for $50,000 at 7 -percent interest. The purchaser also assumes the mortgage on the property of $30,000. Steve's original cost for the house was $175,000 on January 1,2014 , and accumulated depreciation was $30,000 on the date of sale. He collects only the $100,000 down payment in the year of sale. a. If Steve elects to recognize the total gain on the property in the year of sale, calculate the taxable gain. 4 Foodhack Chack My Work b. Assuming Steve uses the installment sale method, complete Form 6252 for the year of the sale. If an amount is zero, enter " 0 ". Enter all amounts as positive numbers. Round all decimals to four places and any dollar amount to the nearest dollar. 11 Commissions and other expenses of sale 12 Income recapture from Form 4797, Part III (see instructions) . . . . . . \begin{tabular}{|r|r|r|} \hline 11 & 0 & \\ \hline 12 & 0 & \\ \hline \end{tabular} 13 Add lines 10,11 , and 12 14 Subtract line 13 from line 5. If zero or less, don't complete the rest of this form. See instructions. 15 If the property described on line 1 above was your main home, enter the amount of your excluded gain. See instructions. Otherwise, enter 0. 17 Subtract line 13 from line 6 . If zero or less, enter 0. Part II Installment Sale Income. Complete this part for all years of the installment agreement. 19 Gross profit percentage (expressed as a decimal amount). Divide line 16 by line 18 . (For years after the year of sale, see instructions) 20 If this is the year of sale, enter the amount from line 17 . Otherwise, enter 0. 21 Payments received during year (see instructions). Don't include interest, whether stated or unstated . . 22 Add lines 20 and 21 23 Payments received in prior years (see instructions). Don't include interest, whether stated or unstated. 24 Installment sale income. Multiply line 22 by line 19 25 Enter the part of line 24 that is ordinary income under the recapture rules. See instructions . . . . 26 Subtract line 25 from line 24. Enter here and on Schedule D or Form 4797. See instructions .... \begin{tabular}{|c|c|c|} \hline 19 & 0.03 & x \\ \hline 20 & 0 & \\ \hline 21 & 100,000 & \\ \hline 22 & 100,000 & \\ \hline 24 & 0 & x \\ \hline 25 & 0 & \\ \hline 26 & 0 & x \\ \hline \end{tabular} Part III Related Party Installment Sale Income. Don't complete if you received the final payment this tax year. 27 Name, address, and taxpayer identifying number of related party 28 Did the related party resell or dispose of the property ("second disposition") during this tax year? 29 If the answer to question 28 is "Yes," complete lines 30 through 37 below unless one of the following conditions is met. Check the box that applies. a The second disposition was more than 2 years after the first disposition (other than dispositions of marketable securities). Ir this box b The first disposition was a sale or exchange of stock to the issuing corporation. c The second disposition was an involuntary conversion and the threat of conversion occurred after the first disposition. d The second disposition occurred after the death of the original seller or buyer. e It can be established to the satisfaction of the IRS that tax avoidance wasn't a principal purpose for either of the dispositions. If this box is checked, attach an explanation. See instructions. For Paperwork Reduction Act Notice, see page 4. Cat. No. 13601R Form 6252(2022) c. Assuming Steve collects $5,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized in tha year under the installment sale method. Round your answer to the nearest dollar. x