Dolzer Inc

Multiple Choice

Dolzer Inc. sold a business asset with a $474,000 adjusted book and tax basis for $775,000. The purchaser paid $100,000 in cash and gave Dolzer a note for the $675,000 balance of the price. Dolzer will not receive a payment on the note until next year. Assuming that Dolzer uses the installment sale method, compute Dolzer's book and tax gain in the year of sale.

A) Book gain $301,000; tax gain $100,000
B) Book and tax gain $38,839
C) Book gain $301,000; tax gain $38,839
D) None of these choices are correct