George sold land to an unrelated party in $2021.$ His basis in the land was $$52,000,$ and the selling price was $$156,000$$$39,000$ payable at closing and $$39,000($plus $10\%$ interest$)$ due January $1,2022,2023,$ and $2024.$

What would be the tax consequences of the following?

Treat each part independently, assume that George did not elect out of the installment method and the installment obligations have values equal to their face amounts.

Ignore interest rates in your calculations. Round the gross profit to three decimal places before converting to a percentage. For example: $\mathrm{.}48245$ would be rounded to $\mathrm{.}482$ and converted to $48\mathrm{.}2\%.$ If required, round final answers to the nearest dollar.

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a$.$ In $2022,$ George borrowed $$15,600$ from the bank. The loan was partially secured by the installment notes, but George was personally liable for the loan.

Borrowing using the installment notes as security for the debt

is not

a disposition; therefore, the installment sale gain

is not

accelerated.

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The installment method applies to gains $($but not losses$)$ from the sale of property by a taxpayer who will receive at least one payment after the year of sale. For many years, practically all gains from the sale of property were eligible for the installment method. Generally, a taxpayer must recognize the deferred profit from an installment sale when the obligation is transferred to another party or otherwise relinquished.

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b$.$ In $2022,$ George gave to his daughter the right to collect all future payments on the installment obligations.

George must recognize a $fill in the blank

$78,000$

gain at the time of the gift.

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Incorrect

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c$.$ On December $31,2022,$ George received the payment due on January $1,2023.$ On December $15,2023,$ George died, and the remaining installment obligation was transferred to his estate. The estate collected the amount due on January $1,2024.$

George must report a $fill in the blank

$26,002$

gain in $2022.$ The transfer of the installment obligations to George's estate

is not

a taxable event.