Upper World Corporation sells tractor trailers on the installment plan. On October 1, 2014, Upper World entered into an installment-sale contract with Lower Sky Inc. for a 5-year period. Equal annual payments under the installment sale are $250,000 and are due beginning October 1, 2014.

Additional information

1. The amount that would be realized on an outright sale of similar trailer is $965,000.

2. The cost of the trailer sold to Lower Sky Inc. is $786,000.

3. The finance charges relating to the installment period are $285,000 based on an effective interest rate of 14.9%, which is appropriate.

4. Circumstances are such that the collection of the installments due under the contract is reasonably assured.

Instructions

What income or loss before income taxes should Upper World record for the year ended December 31, 2014, as a result of the transaction above?