1. George, a cash basis taxpayer, sells equipment for $200,000. The equipment originally cost $70,000 and George deducted $10,000 of tax depreciation as of the date of sale (assume no other depreciation is allowed or allowable). The equipment is subject to a $50,000 loan which the purchaser assumes. George incurred $13,000 of selling expenses related to the sale. The purchaser pays $10,000 at the time of sale and agrees to pay $20,000 per year for the next 7 years. Assume the note provides for adequate stated interest. A. Gross profit on the sale is . B. The contract price is _. C. The gross profit percen
1.
George, a cash basis taxpayer, sells equipment for $200,000. The equipment originally cost
$70,000 and George deducted $10,000 of tax
A. Gross profit on the sale is .
B. The contract price is _.
C. The gross profit percentage is _.
D. Income and the character of such to be reported in the year of sale is_
.
E. Income and the character of such to be reported in each subsequent year is
.
F. Assuming George recognizes the gain on the sale under the cost recovery method for book purposes, the amount of the Schedule M-1 item for the year of the sale is
__________________________________________________________ [favorable] [unfavorable]
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