Sale of an asset for less than book value creates an operating loss which effectively reduces the company's taxes by an amount equal to times .
A)one-half the loss, the company's marginal tax rate
B)the loss, one minus the company's marginal tax rate
C)one-half the loss, one minus the company's marginal tax rate
D)the loss, the company's marginal tax rate

Question

Quizplus · Accepted Answer

When an asset is sold for less than its book value, the loss can be used to offset taxable income, reducing taxes by the loss amount multiplied by the company's marginal tax rate.

Sale of an Asset for Less Than Book Value Creates