Hotel Corporation (the Company) is an accrual basis taxpayer that uses a calendar year end. For the year ended December 31, 2023, the Company has taxable income of $1,000,000 and the Company's CFO has properly computed the Company's federal and state (VA) income taxes of $257,400. In connection with your review of this new client, you learn from the Company's CFO that on December 31, 2022, the Company sold a piece of unimproved real estate for a total sales price of $200,000, with the first payment of $100,000 collected on January 1, 2023. The land originally cost $50,000. The CFO was under the mistaken impression that taxes on this sale would be paid when the final payment was collected on January 1, 2024. 

Required

Calculate the Company's revised federal and VA income taxes for 2023 when this instalment sale is properly reported. Ignore deferred income taxes.

Answer rating: 100% (QA)

To properly report the installment sale of the real estate we need to recognize the gain on the sale ... View the full answer