Question

Linda is the owner of a sole proprietorship. The entity has the following assets.
*Potential depreciation recapture is $5,000.
**The straight-line method has been used to depreciate the building.
Linda sells the business for $260,000 to Juan.
a. Determine the tax consequences to Linda, including the classification of any recognized gain or loss.
b. Determine the tax consequences to Juan.
c. Advise Juan on how the purchase agreement could be modified to produce more beneficial tax consequences for him.


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  • CreatedMay 25, 2015
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