What are the tax consequences of the exchange for, Financial Management

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What are the tax consequences of the exchange for

FEDERAL INCOME TAXATION

Karen Klaushas a machine (section 1245 property) with an adjusted basis of $4,000 and a fair market value of $16,000. the machine originally cost $17,000 when purchased in 2013. In 2017, she exchanged it for another machine with fair market value of $12,000 and recieved $4,000 cash.

a. What are the tax consequences of the exchange for Karen?

b. What would the tax consequences be if the new machine had a fair market value of $16,000 and no cash was recieved?

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