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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Asset Cash Accounts receivable Office furniture and fixtures Building** Land FMV $10,000 25,000 17,000 90,000 80,000 Basis $10,000 15,000 75,000 60,000