A machine was purchased two years ago for $120,000 and can be sold for $50,000 today. The machine has been depreciated using the MACRS 5-year recovery period and the firm pays 40 percent taxes on both ordinary income and capital gains
(a) Compute recaptured depreciation and capital gain (loss), if any.
(b) Find the firm's tax liability.
(a) Book Value = $120,000 (1 - 0.20 - 0.32 ) = $57,600
Recaptured depreciation = $0
Capital loss = $57,600 - $50,000 = $7,600
(b) Tax benefit = $7,600 × 0.40 = $3,040
You might also like to view...
Answer the following statement(s) true (T) or false (F)
1. Everything else being equal, the longer the period of time, the lower the present value. 2. The present value interest factor for i percent and n periods is the inverse of the future value interest factor for k percent and n periods. 3. Given a discount rate of zero percent and n periods of time, the present-value interest factor and future-value interest factor are equal. 4. Annuity due is an amount that occurs at the beginning of each period. 5. Future Value Interest Factor Annuity (FVIFA) is the future value of $1 ordinary annuity for n period compounded at k percent.
The value of a primary key must be unique for each tuple of its table
Indicate whether the statement is true or false.