In 2017, Norma sold Zinc, Inc, common stock for $100,000 cash and a note receivable for $900,000 . The note was due in 2018 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?
a. Norma cannot use the installment method to report her gain if the stock is listed on the New York Stock Exchange.
b. Norma must recognize $75,000 gain in 2017 and she will be liable for interest on taxes deferred under the installment method.
c. Norma must recognize $75,000 gain in 2017 and she will not be liable for interest on the taxes deferred under the installment method if the stock is not publicly traded.
d. Norma should treat the $100,000 received as a recovery of capital.
e. None of the above.
a
RATIONALE: The sale does not qualify for the installment method if the stock is listed on the New York Stock Exchange. The installment method is denied for reporting the gains on stocks and securities if they are traded on an established market.
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