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part 2 PART II Johnson Corporation sold some machinery to its majority owner Peter (an individual who owns 55 percent of Johnson Corp). Johnson Corp
part 2
PART II Johnson Corporation sold some machinery to its majority owner Peter (an individual who owns 55 percent of Johnson Corp). Johnson Corp purchased the machinery for $95,000 and has claimed a total of $30,000 of depreciation expense deductions against the property. Peter will provide Johnson Corp with $15,000 of cash today and provide a $120,000 note that will pay Johnson Corp $60,000 one year from now and $60,000 two years from now. a. What gain or loss does Johnson's realize on the sale? b. What are the amount and character of the gain or loss that Johnson must recognize in the year of sale (if any) and each of the two subsequent years? (Hint: This is an installment transaction) Step by Step Solution
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