Old medical equipment was sold to an unrelated party for $75,000 cash. The original cost of the equipment was $300,000 and it was fully depreciated (no Sec. 179). The cash was deposited in one of the shareholder's personal accounts.

a.Provide a journal entry to calculate the gain on sale and adjust the fixed asset and accumulated depreciation accounts.

b.What is the nature of this gain?

c.Could the Dr. have structured this sale in a different way to avoid taxable income? How?