Tax calculations ?? For each of the following? cases, determine the total taxes
ID: 2618634 • Letter: T
Question
Tax calculations ??
For each of the following? cases, determine the total taxes resulting from the transaction. Assume a 40% tax rate. The asset was purchased 2 years ago for $204,000 and is being depreciated under MACRS using a? 5-year recovery period.
Accumulated depreciation is: $
Round to the nearest dollar
Book value is: $
Round to the nearest dollar
a. The asset is sold for $224,400
Round to the nearest dollar
b. The asset is sold for $153,000
Round to the nearest dollar
c. The asset is sold for $97,920
Round to the nearest dollar
d. The asset is sold for $78,300
Round to the nearest dollar
SALE PRICE CAPITAL GAIN TAX ON CAPITAL GAIN DEPRECIATION RECOVERY TAX ON RECOVERY TOTAL TAX $224,400 More Info Koundea Depreciation Percentages Dy Recovery rear using MACRS TO First Four Property Classes Percentage by recovery year 7 years 10 years 5 years 20% 32% 19% 12% 12% 5% 10% 18% 14% 12% 9% 5% 7% 6% 6% 6% 4% 100% 3 years 33% 45 15% 7% 14% 25% 18% 12% 9% 9% 9% 4% Recovery year 4 10 100% 100% Totals 100% Print DoneExplanation / Answer
Accumulated depreciation = 204000*(0.2+0.32) = 106,080
Book Value = 204,000 -106,080 = 97,920
a. Asset is sold for 224,400
Taxable value = 224,400 -97,920 = 126,480
Total Tax= 0.4*126,480 = $50,592
b. The asset is sold for 153,000
Taxable Value = 153,000 -97,920 = 55,080
Total Tax = 55,080*0.4 = $22,032
c. The asset is sold for 97,920
Since the book value and sale value are equal, Total tax = 0
d. Asset is sold for 78,300
taxable value = 78,300 -97,920 = -19,620
Total tax = -19,620*0.4 = -$7,848 (Negative sign indicates an actual tax savings)
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