Ask Question
BusinessBusiness
25 October, 15:00

in 2019, Norma sold Zinc, Inc., common stock for $100,000 cash and a note receivable for $900,000. The note was due in 2020 with accrued interest at the Federal rate. Norma's basis in the stock was $250,000. This was Norma's only installment sale transaction. Which of the Following statements is correct

+2
Answers (1)
  1. 25 October, 17:05
    0
    A) Norma cannot use the installment method to report her gain if the stock is listed on the New York Stock Exchange.

    Explanation:

    Usually if you sell a capital asset on installments, and the buyer is given more than 1 year to pay the installments, you can spread the capital gains taxes over the period in which you receive the installments. E. g. if you receive 10 yearly payments, you will pay capital gains based on each yearly payment received, and not in a single lump sum. The installment method is only valid for reporting gains, it is not valid for reporting losses.

    But the IRS Publication 537 also establishes that:

    "You can't use the installment method to report gain from the sale of stock or securities traded on an established securities market. You must report the entire gain on the sale in the year in which the trade date falls."

    Since Norma sold stock traded at the NYSE, then she cannot use the installment method to report her capital gains.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “in 2019, Norma sold Zinc, Inc., common stock for $100,000 cash and a note receivable for $900,000. The note was due in 2020 with accrued ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Which document establishes an initial record of the receipt of the inventory? petty cash voucher purchase order vendor's invoice receiving report?
Answers (1)
The Supplies account balance on February 1, 2016 was $2,000. During the month of February Bravo purchased $12,000 of supplies for use in its operations.
Answers (1)
Short term debt is ___ than long-term debt
Answers (1)
Lamar was happy with his position within the organization. one day at lunch he overheard a couple of colleagues talking about some new programs that would create an employee of the week and of the month, and each month that employee would get to go
Answers (2)
If the inflation rate was 3.00% and the nominal interest rate was 8.00% over the last year, what was the real rate of interest over the last year?
Answers (1)
New Questions in Business
The following data from the just completed year are taken from the accounting records of Mason Company: Sales $ 652,000 Direct labor cost $ 81,000 Raw material purchases $ 133,000 Selling expenses $ 102,000 Administrative expenses $ 43,000
Answers (1)
At a volume of 8,000 units, Pwerson Company incurred $32,000 in factory overhead costs, including $12,000 in fixed costs.
Answers (2)
Three identical homes in a neighborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which would have sold for the lowest price?
Answers (1)
would frozen vegetables be considered a normal or inferior good?
Answers (1)
An airline has 81% of its flights depart on schedule. it has 69% of its flights depart and arrive on schedule. find the probability that a flight that departs on schedule also arrives on schedule. round the answer to two decimal places.
Answers (1)
Home » Business » in 2019, Norma sold Zinc, Inc., common stock for $100,000 cash and a note receivable for $900,000. The note was due in 2020 with accrued interest at the Federal rate. Norma's basis in the stock was $250,000.
Sign Up Forgot Password?