Problem:
Ranch Corporation sells five acres of land in 2009 for a total contract price of $125,000. The company received a down payment of $25,000 and is to receive $20,000 in each of the following five years. Ranch's gross profit from the sale is $80,000.
Part A: What are the tax consequences if: Ranch reports its gain on the installment method?
Part B: What are the tax consequences if: Ranch elects out of the installment method?