Comprehensive Problem 11-70 (LO 11-1, LO 11-2, LO 11-3, LO 11-4, LO 11-5, LO 11-6)...
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Comprehensive Problem 11-70 (LO 11-1, LO 11-2, LO 11-3, LO 11-4, LO 11-5, LO 11-6) (Static) Fontenot Corporation sold some machinery to its majority owner Gray (an individual who owns 60 percent of Fontenot). Fontenot purchased the machinery for $100,000 and has claimed a total of $40,000 of depreciation expense deductions against the property. Gray will provide Fontenot with $10,000 cash today and a $100,000 note that will pay Fontenot $50,000 one year from now and $50,000 two years from now. Required: a. What gain or loss does Fontenot realize on the sale? b. What are the amount and character of the gain or loss that Fontenot must recognize in the year of sale (if any) and each of the two subsequent years? (Hint: Use the Internal Revenue Code and start with 5453.) Complete this question by entering your answers in the tabs below. What are the amount and character of the gain or loss that fontenot must recognize in the year of sale (if any) and each of the two subsequent years? (Hint: Use the Internal Revenue Code and start with 5453. ) Note: Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable
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