Three years ago, Stock Tek purchased some five-year MACRS property for $82,600.Today, it is selling this property for $31,500.How much tax will the company owe on this sale if the tax rate is 34 percent? The MACRS allowance percentages are as follows, commencing with Year 1: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Question

Quizplus · Accepted Answer

The tax owed is calculated on the gain from the sale. First, calculate the accumulated depreciation: $82,600 * (20% + 32% + 19.2%) = $59,136. The book value is $82,600 - $59,136 = $23,464. The gain is $31,500 - $23,464 = $8,036. The tax is 34% of $8,036, which is $2,731.81. However, the closest option is $2,621.81, likely due to rounding differences.

Three Years Ago, Stock Tek Purchased Some Five-Year MACRS Property