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Robert Graves sold his house to George Tombs for a total of $ 200,000. Earnest money of $ 10,000 was received at the end of the year prior to the closing, The remaining $30,000 of the down payment was received at closing. George assumed an $80,000 mortgage on the property and signed a second mortgage for $ 80,000. If Robert's basis was $140,000 the tax results, in part, are as follows:

• Contract price $160,000; gross profit: 37.5%; payments in year of sale: $40,000
• Contract price $120,000; gross profit: 50%; payments in year of sale: $40,000
• Contract price $160,000; gross profit: 37.5%; payments in year of sale: $30,000
• Contract price $120,000; gross profit: 66.7%; payments in year of sale: $30,000