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1. Suppose the taxpayer originally purchased the machinery by paying $12,000 in cash and giving the seller a note for $12,000. When she sold it

1. Suppose the taxpayer originally purchased the machinery by paying $12,000 in cash and giving the seller a note for $12,000. When she sold it she received $38,000 in cash and the buyer assumed the $12,000 note.

a. What is the amount realized?

b. What is the adjusted basis of the machinery?

c. What is the gain on the sale of the machinery?

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