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Answer :
Final answer:
Zeke will recognize a gain of $0 in the current year from the sale of the land, and the remaining gain will be recognized next year.
Explanation:
In this case, Zeke will recognize a gain equal to the sales price minus the adjusted basis of the land. The sales price was $12,000 and the adjusted basis was $9,000, so the gain would be $12,000 - $9,000 = $3,000.
However, Zeke will only recognize part of this gain in the current year. Since he will only receive a down payment of $4,000 at the time of the sale, he will recognize a gain of $4,000 - $9,000 = $0 in the current year.
The remaining gain of $3,000 will be recognized when Zeke receives the remaining $8,000 early next year.
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