5. Tom sold a land for $400,000 on January 1. The land had an… 5. Tom sold a land for $400,000 on January 1. The land had an adjusted basis of $200,000. The agreement specified a down payment of $100,000, with the remaining $300,000 sales price to be paid over a three-year-note term at 10% interest. How much of the down payment is recognized as capital gain?6. John runs a small retail marketing business as a limited liability company that is taxed as a sole proprietorship. His business currently applies the cash method of accounting. After 10 years in the business, the company has grown to a point where John believes he should switch to the accrual method of accounting. Currently, he has $21,000 in accounts payable that were incurred in the prior year but were not deductible because no payment was made on them. Also, the business has $12,000 in accounts receivable that were not reported in income last year, because he operated the business on a cash basis.Under the four-year method of accounting change, how much is the amount adjustment that John must make to his income each year?LawSocial ScienceTax law FINANCE fm201
