question from a relative of a relative-just want to confirm my thinking. taxpayer owns a house as an investment. house is on the market to be sold. they have a buyer who has offered to rent the house for one year with an option to buy at any point during the year. they are being paid 50,000 for the option to buy. the point that's not clear yet is what happens to the 50,000 if the buyer doesn't exercise the option. i need to get more info on that. however i'm thinking at this point the 50,000 would be recognized as taxable income when the house is actually sold (would be included in the sale proceeds) or if the buyer doesn't exercise the option and the taxpayer gets to keep the 50,000 would be a capital gain ,with no basis, of 50,000. am i on track?
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