McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 3

In year 0, Canon purchased a machine to use in its business for $56,000.In year 3, Canon sold the machine for $42,000.Between the date of the purchase and the date of the sale, Canon depreciated the machine by $32,000.
a.What is the amount and character of the gain Canon will recognize on the sale, assuming that it is a partnership?
b.What is the amount and character of the gain Canon will recognize on the sale, assuming that it is a corporation?
c.What is the amount and character of the gain Canon will recognize on the sale, assuming that it is a corporation and the sale proceeds were increased to $60,000?
d.What is the amount and character of the gain Canon will recognize on the sale, assuming that it is a corporation and the sale proceeds were decreased to $20,000?