In year 0, Javens Inc. sold machinery with a fair market valueof $610,000 to Chris. The machinery’s original basis was $477,020and Javens’s accumulated depreciation on the machinery was $71,000,so its adjusted basis to Javens was $406,020. Chris paid Javens$61,000 immediately (in year 0) and provided a note to Javensindicating that Chris would pay Javens $91,500 a year for six yearsbeginning in year 1. What is the amount and character of the gainthat Javens will recognize in year 0? What amount and character ofthe gain will Javens recognize in years 1 through 6?
