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

Exercise 62

Hauswirth Corporation sold (or exchanged) some manufacturing equipment in year 0. Hauswirth bought the machinery several years ago for $65,000 and it has claimed $23,000 of depreciation expense against the equipment.
a. Assuming that Hauswirth receives $50,000 in cash for the equipment, compute the amount and character of Hauswirth's recognized gain or loss on the sale.
b. Assuming that Hauswirth receives like-kind equipment with a fair market value of $50,000 in exchange for its equipment, compute Hauswirth's gain realized, gain recognized, deferred gain, and basis in the new equipment.
c. Assuming that Hauswirth receives $20,000 in cash in year 0 and a $50,000 note receivable that is payable in year 1, compute the amount and character of Hauswirth's gain in year 0 and in year 1.