Kendall Knox has a machine (Section 1245 property) with an adjusted basis of $8,000 and a fair market value of $32,000. fte machine originally cost $34,000 when purchased in 2007. In 2012, he exchanged it for another machine with a fair market value of $24,000 and received $8,000 cash.
(a.) What are the tax consequences of the exchange for Kendall?
(b.) What would the tax consequences be if the new machine had a fair market value of $32,000 and no cash was received?

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The Answer of Kendall Knox has a machine (Section 1245 property) with an adjusted basis of $8,000 and a fair market value of $32,000. fte machine originally cost $34,000 when purchased in 2007. In 2012, he exchanged it for another machine with a fair market value of $24,000 and received $8,000 cash.
(a.) What are the tax consequences of the exchange for Kendall?
(b.) What would the tax consequences be if the new machine had a fair market value of $32,000 and no cash was received?

Kendall Knox Has a Machine (Section 1245 Property) with an Adjusted