Problem 1. Mr. Z, a nondealer, sold assets on an installment plan. Determine Mr. Z's gross income for 2008. Relevant data include:
Year Installment sales Gross profit 2008 collections
2008 $200,000 50,000 25,000
2007 300,000 81,000 80,000
2008 400,000 96,000 125,000
Problem 2. Tom is a cash-basis, calendar year taxpayer. Which of the following December items result in gross income or deductions for the current year?
A. Check received for December rent, $700 not deposited until January 4.
B. Check for $1,100 to pay Tom's state income taxes mailed Dec 28, cashed Jan 7.
C. Cash received in the amount of $500 for services to be rendered the following year.
D. Interest of $800 credited to his savings account, added to Tom's account balance.
E. Check received for Jan rent, $700 deposited on Jan 9.
F. Charitable contribution of $300, charged to mastercard.
G. Tom's totaling $2,000 sent for services rendered during the year, uncollected as of year-end.