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PDtax, Master's Degree
Category: Business and Finance Homework
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Experience:  MBA/CPA, Former college instructor and tutor.
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A corporation is selling an existing asset for $21,000. The

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A corporation is selling an existing asset for $21,000. The asset, when purchased, cost $10,000, was being depreciated under MACRS using a five-year recovery period, and has been depreciated for four full years. If the assumed tax rate is 40 percent on ordinary income and capital gains, the tax effect of this transaction is
Submitted: 1 year ago.
Category: Business and Finance Homework
Expert:  PDtax replied 1 year ago.

Hi from just answer. I'm PDtax, and will assist.

Expert:  PDtax replied 1 year ago.

The adjusted basis of the asset at sale is 1728, so the gain is 19272.

Expert:  PDtax replied 1 year ago.

Since the tax rate is 40% on the gain, the tax cost is $7709.

Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.

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