USA

Asher is a retailer selling widgets. In the current year, Asher sells 1,000 widgets to Miranda Wrights for $10,000 payable as follows: $2,000 in year 1 and 4 successive $2,000 notes due in each of the following 4 years. Asher's basis in the widgets is $1,000. What are the tax consequences of the sale? 5. a. Assuming the notes have a fair market value equal to the face amount of the b. Asher wll recognize $1,800 in year 1 and $1,800 in each of the 4 successive c. Reporting income under the installment reporting will apply but all income would d. Reporting income under the installment method will apply and whether the notes, Asher will immediately realize and recognize gain of $9,000 years be characterized as ordinary income is ordinary or capital wil depend on Asher's holding period in the widgets None of the above. e