Desmond Photocopying and Supplies, Inc. exchanges an old photocopying machine (with an adjusted basis of $0 and a FMV of $5,000) plus $3,000 in cash for a new photocopying machine. Desmond's book value in the machine is $4,000. The FMB of the new machine is $8,000. How does this exchange affect the company's taxable income and its net income for financial accounting purposes for the tax year of the exchange? What is its adjusted basis in the new photocopying machine?