(L03) Installment Sale Zian Davis owns several apartment buildings in Los Angeles and has an offer from a business associate, Ace Arnold, to purchase one of the buildings on October 31, 2023. Ace does not have the money to purchase the apartment building outright and offers to pay Zian over a fiveyear period beginning next year. Zian is leery, but he contacts his attorney to draw up a contract with the following information:

Sales price \(\( \$ \) 500,000\)
• Payments of \(\( \$ \) 100,000\) each, to be made on January 1 of 2024, 2025, 2026, 2027, and 2028.
• Interest rate \(6 %\), semiannual compounding beginning January 1, 2024

Zian had paid \(\( \$ \) 385,000\) for the building and its adjusted basis as of October 31,2023 is \(\( \$ \) 351,400\). He would like you to prepare his 2023 tax return and believes he should not have to pay any tax on the sale until 2028 when he receives the final payment. Prepare a response to Zian and the file.