Steve Drake sells a rental house on January 1, 2013, and receives $130,000 cash and a note for $55,000 at 10 percent interest. The purchaser also assumes the mortgage on the property of $45,000. Steve's adjusted basis in the house on the date of sale is $152,500, and he collects only the $130,000 down payment in the year of sale.

a. If Steve elects to recognize the total gain on the property in the year of sale, calculate the taxable gain. $___________

b. Assuming Steve uses the installment sale method, complete Form 6252 on Page 8-49 for the year of the sale.

c. Assuming Steve collects $5,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized under the installment sale method. $___________