Question

In year 0, Javens Inc. sold machinery with a fair market value of $560,000 to Chris. The machinery's original basis was $439,320 and Javens's accumulated depreciation on the machinery was $66.000, so its adjusted basis to Javens was $373,320. Chris paid Javens $56,000 immediately (in year O) and provided a note to Javens indicating that Chris would pay Javens $84.000 a year for six years beginning in year 1. a. What are the amount and character of the gain that Javens will recognize in year 0? b. What amount and character of the gain will Javens recognize in years 1 through 6? Complete this question by entering your answers in the tabs below. Required A Required B What are the amount and character of the gain that Javens will recognize in year 0? (Do not round intermediate computations.) Amount Description Recognized Gain Character of Recognized Gain: Ordinary Gain $1231 gain
​​​​​​

Answer 1

OL page=0 recognize year a Original basts Realized gain (@) Amount and charauter the gain that ſavens will payment received in year I to you 6, 484000 Inswer inize in Amount received $560000 basis = $439320 Accumulated depreciation 066000 Adjusted Basis +373320 (4439320-866000) $ 186680 ($560000-$373320) Recognized quis 478068 ( 66000+ 12068) oudinary gain #66000 (lessen of realized gain $ 12068 deporeciation) ondinary gain is not workingi Gain eligible for installment eligible for installment reporting. = $120680 (186680 - 66000) reporting ) gross profit l. = 40.55), (120680) 560000) recognized payment in yearo 12068 ( 56000 x 21.550.) (6) Amount and character of the gain will joven avens recognize in y cars ļ through of gaina accumulated 1931 on Goin ( 84000 x 21.557.) من Recognized gain in year I to yeox 6 $ 18102 231 gain character of gain