An apartment complex has net operating income of $15,000, depreciation of $8,000, and interest expense of $13,000. The tax rate is 30%. a) What is taxable income or loss?
B) What is the tax shield benefit or tax owed?

Question

Quizplus · Accepted Answer

The Answer is A) ($6,000); B) $1,800
Explanation: Refer to Appendix 20A.
a)

\begin{array}{lr} ext { Net operating income } & \$ 15,000 \ ext { - Depreciation } & 8,000 \ ext { - Interest expense } & \underline{13,000} \ ext { Taxable income (loss) } & (\$ 6,000)\end{array}

b)

\begin{array}{lr} ext { Taxable loss } & \$ 6,000 \ ext { Tax Rate } & \underline { .30} \ ext { Tax shield benefit } & \$ 1,800\end{array}

An Apartment Complex Has Net Operating Income of $15,000, Depreciation