John’s basis in the painting in problem 67 is:

a. $0

b. $25,000

c. $30,000

d. $39,000

e, $42,250

problem 67

John sold a painting in February 2019 for $40,000. He received $10,000 in February and was to receive $15,000 in 2020 and 2021, plus interest. He purchased the painting in 2008 for $15,000, and its basis at time of sale was $15,000. The buyer defaulted on the obligation on January 1, 2020, and John repossessed the painting. He incurred no costs to repossess the painting, and its fair market value at repossession date was $39,000. John’s recognized gain on the repossession is:

a. $6,250

b. $3250

c. $25,000

d. $275750

e. $39,000