Determine the interest due which is considered personal interest expense 6667

Determine the interest due which is considered

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4. Determine the interest due (which is considered personal interest expense). EXAMPLE 13.36 Rita Brown sells a painting held for five years as an investment. The painting was purchased for $5,000 and sold to Joe Smith for $15,000, $6,000 down and a $9,000 face value note worth $7,000 due in three years together with 10 percent interest. If she opts for installment reporting, her gross profit percentage is 66 2/3:($15,000 – $5,000)$15,000resulting in a capital gain of $4,000 in the year of sale and $6,000 upon collection of the note (plus interest).If Rita elects not to use installment reporting, the result is as follows:Year of Sale:Amount realizedCash$6,000Fair market value of note 7,000
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PLANNING POINTER
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