You purchased an asset 3 years ago at a cost of $135,000 and sold it today for $82,500.The equipment is 5-year property for MACRS.The MACRS table values are 0.2000,0.3200,0.1920,0.1152,0.1152,and 0.0576 for Years 1 to 6,respectively.Which one of the following statements is correct if the tax rate is 34 percent?

Question

Quizplus · Accepted Answer

Current book value = $135,000 × (1 - 0.2 - 0.32 - 0.192)= $38,880 Taxable sale amount = $82,500 - $38,880 = $43,620 Tax = $43,620 × 0.34 = $14,830.80 After-tax salvage value = $82,500 - $14,830.80 = $67,669.20

You Purchased an Asset 3 Years Ago at a Cost