Scenario: In October 2020, Chen sells property with an adjusted basis of $40,000 for $200,000. The buyer pays Chen $40,000 cash at the time of sale transaction with the remaining $160,000 to be paid in five annual installments of $32,000 beginning in November 2021 with interest at 10%.

a. What is the amount of income to be reported by Chen in 2020?

b. What is the amount of income to be reported in later years? In both cases, ignore interest.

10.1.3