A machine with a book value of $60,000 could be sold for $80,000. The corporation that owns the machine has taxable income of $670,000 and a 40 percent tax rate. What would be the tax on the sale of the machine?

Question

Quizplus · Accepted Answer

The tax on the sale of the machine is calculated on the gain from the sale, which is the selling price minus the book value ($80,000 - $60,000 = $20,000). With a 40% tax rate, the tax on the gain is 40% of $20,000, which equals $8,000.

A Machine with a Book Value of $60,000 Could Be